Hyundai has focused specifically on doing well in the J.D. Power arena. Task forces were set up at Hyundai's Ulsan and Asan plants in 2000 with the explicit purpose of improving the initial quality score.
There are about 50 members of the task forces, which are overseen by Suh Byung Kee, senior executive vice president of the quality division.
"The task force members have traveled to the Hyundai America Technical Center in Ann Arbor, Michigan, once a year since 2002 to study U.S. road conditions, driver habits, weather conditions," says S.M. Oh, deputy general manager of quality control at the Asan plant. "We also have closely monitored top-ranking foreign carmakers that did well in the J.D. Power survey."
The effort paid off. The Initial Quality Study measures defects in the first 90 days of ownership. According to the 2004 study, Hyundai owners reported 102 defects per 100 vehicles, while Toyota-badged vehicles had 104 defects. Hyundai had 143 defects per 100 vehicles in last year's study.
This year's survey polled 51,000 car owners about problems encountered in the first 90 days of ownership.
In Seoul, they've been celebrating the results. Hyundai recently handed out $29 million in quality bonuses to 35,000 employees below manager level - $833 to each worker.
The new emphasis on quality followed Hyundai's painful failure in Canada. In 1993, Hyundai Motor shut its Bromont, Quebec, plant because of the poor quality of the Sonata model produced there. The unsatisfactory reliability cost Hyundai the huge sales momentum it had gained by selling on price in the late 1980s.
When Chung took over, he laid down the law. Beginning in early 2000, the chairman began asking for written "quality commitments" from managers involved in new-model development projects.
The written promises were, in effect, contracts. They could be used to justify the dismissal of a manager if defects cropped up on cars.
Not only had the North American experience been embarrassing; it threatened to destroy the Hyundai brand, at least in the United States. Chung wanted quality uppermost on his executives' minds, and accountability was the way to do it.
"Chung made quality his mantra," Shin says.
Chung also made it his direct responsibility. The quality division reports to him.
The division inspects the quality of new models after they come out of the company's r&d center in Namyang but before they go into production. Previously, quality checks were handled by the r&d center, not by a separate independent unit.
Chung holds a quality meeting twice a month to discuss how things are going. The chairman personally leads the meeting, which can last up to four hours. As many as 50 executives, specialists and engineers attend, and they must be ready to discuss customer and assembly line complaints in detail.
The meetings can turn technical quickly because so many senior Hyundai executives are engineers. Competitive models often are rolled in and given a close inspection. Parts are pulled off, examined and compared with the same components on a Hyundai model.
Toyotas are studied often. The ritual is partly symbolic. Hyundai wants its quality to be better than Toyota's.
Chung usually flies to the United States every quarter to preside over the same kind of meeting. The latest one was held in May at Hyundai's U.S. headquarters in Fountain Valley, Calif.
"Since Hyundai Motor was founded in 1967, there had been no real effort to upgrade the quality," Shin says. "When Chung took control of the company (in 1999), Hyundai initiated the long-awaited drive for quality improvement."