Abrupt change comes as sales growth slows

Dave Zuchowski named CEO of Hyundai Motor America, succeeding John Krafcik

Abrupt change comes as sales growth slows

Dave Zuchowski, Hyundai Motor America's executive vice president of U.S. sales and a favorite of dealers, becomes CEO on Jan. 1, 2014.
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LOS ANGELES -- John Krafcik will step down as CEO of Hyundai Motor America at year end, capping a five-year run during which he steered the Hyundai brand to record U.S. sales and market share. Krafcik will be succeeded by Dave Zuchowski, Hyundai's executive vice president of U.S. sales, on Jan. 1.

A Hyundai spokesman declined to say whether Krafcik was retiring or whether he planned to take another job elsewhere. According to a Hyundai statement, Krafcik's contract with Hyundai expires Dec. 31.

The abrupt change atop Hyundai's U.S. management comes as the company's U.S. sales growth has slowed. Zuchowski will become Hyundai America's sixth CEO since 2003.

"Dave has consistently distinguished himself as a results-oriented and motivational leader in our industry," Hyundai CFO Im Tak Uk said of Zuchowski in the statement. "During his time at Hyundai, Dave has been instrumental in our growth, especially among our dealers. He exhibits a rare combination of passion, intelligence, creativity and diligence, and we are confident that he is the right choice to build on John's momentum and take Hyundai to new and greater heights."

Krafcik: "Our brand will continue to expand and thrive for years to come."

Zuchowski has been Hyundai's U.S. sales boss since joining the company in 2007.

His appointment, hailed by dealers, puts a more sales-oriented executive at the helm of Hyundai's U.S. operations at a time when its volume growth is trailing the overall market.

"I am both humbled and excited to lead Hyundai Motor America into the next chapter by continuing to build on John's great legacy, and focusing on what matters most -- building the highest quality, safest and most diverse fleet of models that customers love," Zuchowski said in a statement.

A 33-year veteran of the auto industry, Zuchowski joined Hyundai from Mazda North America, where he served as vice president of sales and field operations.

He started his automotive career in 1980 as a sales associate with Ford Motor Co., where he later held various management posts, including regional manager, product marketing manager, national merchandising manager and field operations manager for the Ford and Lincoln Mercury divisions.

In an interview with Automotive News today, Zuchowski credited Krafcik for leading the company through its recent period of growth and said he hopes to build on the company's latest successes.

'Refine things'

"John was terrific for Hyundai … and those are big shoes for me to fill," Zuchowski said. "We just want to refine things and build and grow."

Zuchowski said Hyundai will post another record sales year in 2013 with deliveries of around 720,000 vehicles and expects to generate record U.S. volume again in 2014.

Key to that will be launching redesigned versions of the Sonata mid-sized sedan and Genesis premium sedan in the first half of next year, he said.

"It's all about product in our business and we've got some great stories in 2014," Zuchowski said. "My No. 1 priority is making sure we hit the ball out of the park with these product launches."

With few new vehicle launches to promote and the industry ramping up advertising and incentives, Hyundai's sales gains slowed in 2013. Zuchowski expects external competitive pressures to continue next year.

"Capacity is being added and everybody's getting more aggressive in terms of advertising spends and incentive spend," he said. "I certainly don't think the competitive environment will slack off."

Scott Fink, chairman of Hyundai's dealer council and owner of three Hyundai dealerships in Florida, says Hyundai dealers were "thrilled" to hear of Zuchowski's promotion.

"We think if something didn't happen, we potentially had the chance of losing Dave, and Dave is great," Fink said. "He is a dealer guy. He understands the business, he can talk to the dealers, he can talk to the Koreans. He's a brilliant guy."

Record U.S. sales

The Hyundai brand's U.S. sales hit a record 703,007 units in 2012, and volume has advanced 2 percent this year through November to 657,778.

But its share of the U.S. market has slipped to 4.6 percent this year from 4.9 percent in 2012. The brand's U.S. market share peaked at 5.1 percent in 2011, up from 3 percent in 2008, when Krafcik became CEO.

"It's been a sincere privilege and honor to lead Hyundai Motor America over the past five years, and I am confident that with Dave's succession, our brand will continue to expand and thrive for years to come," Krafcik said in a statement. "We have many of the best and brightest employees in the business coupled with a committed and talented dealer network that will continue to pay dividends."

Krafcik has been one of Hyundai's longest-serving and most admired U.S. CEOs, though the company has a history of keeping executives on short reins, and parting ways if they don't reach volume targets. Krafcik did not respond to requests for comment.

Hyundai's U.S. sales gains have also tapered off in part because of constraints in manufacturing capacity.

Krafcik has said Hyundai officials in Seoul are more interested in managing the brand's existing U.S. owner base and improving customer service and satisfaction, along with the dealer experience, before embarking on another new assembly plant to substantially boost output and sales volumes.

Lean production

He joined Hyundai in 2004 as vice president of product development and strategic planning after stints at Ford Motor Co. and NUMMI, a joint venture of General Motors and Toyota Motor Corp.

A New York Yankees fan and runner, Krafcik made his mark on the industry early in his career by coining the term "lean production" to describe the vehicle assembly philosophy of many Japanese automakers while earning his Master of Science in Management at MIT's Sloan school of Management in the 1980s.

In five years as CEO, he overhauled Hyundai's U.S. product lineup with a greater focus on design, fuel economy, customer service and value, while expanding the brand upscale with the Genesis and Equus nameplates.

The product blitz included the launch of key products such as a revamped Sonata, Elantra compact car, and Santa Fe crossover, as well as niche products like the $60,000 Equus luxury sedan and the funky Veloster coupe.

The product renaissance ushered in an new era of styling at Hyundai -- what it calls swoopy, sculpted "fluidic sculpture" -- that helped distinguish the brand in the U.S. market.

At the same time, Hyundai's fuel economy claims -- a major selling point for the brand -- took a hit last year when the company was cited by the Environmental Protection Agency for overstating the mpg ratings on several models.

The admission covered some 600,000 vehicles and was an embarrassment for Hyundai, which has made fuel economy -- it once marketed four vehicles with 40 mpg ratings -- a key pillar of its brand-building strategy.

MPG settlement

Hyundai reached a preliminary $210 million settlement this week with owners affected by the inflated fuel economy claims.

Under Krafcik, the company also launched the Hyundai Assurance program, a promotion in which the automaker offered to buy back vehicles from customers who became unemployed during the recession.

Fink said Krafcik did a "miraculous" job, and he and Zuchowski worked well as a team.

"He provided great leadership but nothing lasts forever," Fink said of Krafcik. "It's a new era and Dave will, and as with any leadership change, help invigorate what's happening at HMA and invigorate the dealers."

You can reach Ryan Beene at rbeene@crain.com. -- Follow Ryan on Twitter

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