RYAN BEENE

Krafcik left strong legacy, and some unfinished business

Ryan Beene is a West Coast reporter for Automotive News.Ryan Beene is a West Coast reporter for Automotive News.
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LOS ANGELES -- There are still some unanswered questions about last week's announcement that John Krafcik is being replaced as CEO of Hyundai Motor America.

We know his contract with Hyundai was set to expire at year end, but was it the higher-ups at Hyundai Motor Co. in South Korea or Krafcik himself who chose not to renew? If it's the latter, why? If it's the former, what, if anything, was the trigger for his ouster? And what will Krafcik do next?

That last question will be answered in due time. The others are less likely to be cleared up soon. Neither the company nor Krafcik is saying much, and don't expect that to change.

Besides, it's more instructive to look at what we do know about Krafcik's tenure as CEO, rather than what we don't know about its end.

Krafcik presided over one of the most dramatic ascents the U.S. auto industry has ever seen -- in terms of sales, market share, product improvements and brand reputation. Even though Hyundai sales grew more slowly than the market this year, the brand will still post its fourth straight annual sales record.

With his strong background in product, Krafcik also had arguably more influence than any U.S. chief in the brand's history on Hyundai's current crop of vehicles, which has taken market share away from more established rival brands with eye-catching designs, lots of content and good value.

Even so, CEOs are always on the hot seat when rapid sales growth slows down. And it probably didn't help Krafcik's standing with his Korean bosses that the Hyundai-Kia fuel-economy fiasco -- plus the hundreds of millions of dollars that will be spent to reimburse customers and settle consumer lawsuits over the bogus mpg numbers -- happened under his watch.

And let's not forget that five years as CEO is a pretty darned good run for the top guy (or gal) at any auto brand in the United States. That's especially true at Korean brands, which have been known to have a hair trigger when it comes to removing top American executives.

Unfinished business

Krafcik also leaves behind some unfinished business for Dave Zuchowski, the U.S. sales boss who succeeded him as CEO on Wednesday.

He'll have to prove that Hyundai's recent gains are real and sustainable, by winning customers in a cutthroat marketplace against competitors that are back to full strength -- not stricken by natural disasters or recession-driven industry turmoil.

His top priority next year will be overseeing two high-stakes launches: the high-volume Sonata mid-sized sedan and the Genesis luxury car, which Hyundai hopes will boost its reputation and compete with German brands. He must also make progress on the company's continuing mission to improve customer satisfaction and quality.

Zuchowski is a 33-year industry veteran with deep sales and operational experience whom company insiders have long expected to be Krafcik's eventual successor. As the architect of the automaker's sales and dealer strategy, he has also been an integral part of Hyundai's successful run since joining the company in 2007. His promotion will bring a different skill set to the top spot, but also a large degree of continuity.

At the Automotive News World Congress in January 2012, Krafcik told the audience of industry executives, dealers and media gathered in a ballroom at Detroit's Renaissance Center about how Hyundai was growing from a "value" brand to a "valuable brand."

Krafcik made a lot of progress toward that goal. Now it is Zuchowski's turn to write Hyundai's next chapter.

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

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