When John Krafcik joined Hyundai Motor America as head of product development and strategic planning in 2004, he often asked his colleagues in the U.S. and South Korea why the company wasn’t pursuing certain new-product initiatives. The common responses he received typically began with “because Toyota doesn’t do that.”
“That was frustrating to me and others because, well, the reason why we should be taking various initiatives is because Toyota isn’t—or because anybody else isn’t doing it, either,” the frank-speaking Krafcik explained. “Doing something no one’s done before is leadership. We pushed hard for a lot of things like that.”
Within the past six years, Hyundai’s view of itself has changed dramatically, as proved by its growth, profits, and recent product successes including the watershed 2009 Genesis, Tau V8, 2011 Sonata, and the 2012 Equus E-segment luxury sedan. The 43-year-old automaker has moved with surprising speed from the “fast follower” mindset that dominated its formative years to a clear strategy of leading the industry in every product segment in which it competes.
Krafcik, now HMA’s President and Chief Executive Officer, said Hyundai’s product-development culture is now all about taking “bold positions.”
“Our decision to go with only four-cylinder engines in the 2011 Sonata, with no V6 option, allowed us to optimize fuel efficiency through both the powertrain and the resulting reduced mass in the vehicle,” he told AEI recently at Hyundai’s U.S. technical center in Ann Arbor, MI.
“We’ve taken leadership positions on various technologies, including standard electronic stability control and side airbags. We decided to design and engineer our own six-speed automatic [the new A6MF2] rather than purchasing it, which allows us to better control costs as well as mastering the technology,” Krafcik noted.
He also explained that while Hyundai has tried joint ventures, they have not fit well with the company’s increasingly self-confident culture.
“The ‘world engine’ [made by the Global Engine Manufacturing Alliance, a partnership of Hyundai, Chrysler, and Mitsubishi] was our design,” he noted, “and in the end we felt compromised by our partners. As a company we now believe that if something needs to be done, it’s better to do it on our own.”
He adds that Hyundai’s hybrid and EV strategy is to “develop our own solutions and technologies,” including using lithium-polymer battery cells in the 2012 Sonata Hybrid.
Hyundai was among the first OEMs to publicly declare a vehicle weight-reduction strategy, another “bold position” that Krafcik asserted “will take hundreds of pounds out of every new vehicle we launch.” The base 2011 Sonata’s 3199 lb (1451 kg) curb weight is 100 lb (45.3 kg) lighter than its predecessor, and the car is the lightest sedan in its class—a fact that is not lost on engineers at GM, Ford, BMW, and Toyota with whom AEI has spoken about the new Sonata.
“We were extremely corpulent on weight before this,” said Krafcik. “The way you measure the competency of your engineering organization is by the weight of the car. All of the industry’s midsize cars are carrying around approximately 100 pounds of excess mass just to protect V6 penetrations.”
Hyundai’s strategy of designing the new Sonata exclusively for naturally aspirated and turbocharged four-cylinder powertrains allowed engineers to optimize the car’s front-end structure, crash-package space, engine cradle, and other hardware for the lighter power unit.
The decision, which resulted in (estimated) 35 mpg EPA highway fuel efficiency, was validated recently in a conversation Krafcik had with an executive from a Japanese OEM.
“He told me, ‘Thanks for not doing a V6 and for sticking with a four-cylinder strategy,’ because he’d been trying to get approval for the same thing at his company, pushing for mass-reduction solutions,” Krafcik said.
Along with greater use of advanced steels, taking significant mass out of the vehicle interior is the next big opportunity to reduce curb weight—“it’s what we’ve got to do before restoring to costly lightweight materials,” he explained.
Fast cycle-time learning
Krafcik earned his mechanical engineering degree at Stanford, his deep love of automobiles vectoring him away from an E/E degree and the lure of a Silicon Valley career.
The engineering education, along with landing a job at NUMMI, the GM-Toyota joint venture in California, helped drill into Krafcik the importance of quantification in his approach to business. So did his post-NUMMI graduate assistantship at MIT, where he worked with Prof. James Womack, author of the landmark book, The Machine that Changed the World. Womack credits Krafcik for coining the phrase “lean production.”
“If you can measure it, you know exactly where you are, know where you want to be, and make a plan to bridge that gap. I still think that way in everything I do,” he said.
Hyundai’s speed in developing its product portfolio has vexed some competitors, but Krafcik explained that the key to the company’s success has been “fast cycle-time learning” opportunities.
“If you took the number of product-development projects that we’ve done as a company since 2005, and divided by the number of engineers we have, that metric is probably higher than any other company in the industry. Many of our guys are running through multiple product programs simultaneously.
“We’ve simply been doing more programs and learning more, maybe 50-60% more quickly than the next highest competitor, I’d venture to guess,” he opined. “As a result of that we’re getting remarkable synergy within product development.”
Hyundai engineers are organized by systems focus and typically work cross-functionally within a broad bandwidth of vehicles. “It’s not uncommon to have responsibility for everything from the Accent to the Equus,” Krafcik noted. “We don’t have many engineers dedicated to single programs. Even our development engineers are typically juggling lots of different programs at once. I think that’s a fundamental difference between Hyundai and many others.”
Currently Hyundai is represented in 65-70% of the volume segments in North America, Krafcik reckons, and there are opportunities yet untapped. The company has closely investigated the compact pickup segment in recent years, bubbling up unibody designs for consideration, but the dominance of the Detroit 3 in full-size trucks has so far put the brakes on development.
Krafcik said he is very interested in how Nissan’s new NV commercial van fares in the marketplace. “It’s a hideous-looking vehicle but the buyer probably doesn’t care because they want function,” he said.
After about 18 months as head of HMA, Krafcik is clearly enjoying the job. As expected he loves the product-development and engineering interface, of course, but he admitted that he also relishes visiting dealers and understanding the retail marketplace.
“And the dealers love our focus—three trim levels and only 92 build combinations, compared with thousands offered by other OEMs,” he said. “We’ve moved beyond Honda in this area; they’re at about 140 build combinations. Nobody else in the industry is close to us.
“But the dealers want even fewer—they told us the Genesis Coupe’s 14 build combinations are too many. So we’re going to pare it down to just eight.”