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Off With Their Heads

The departure of Hyundai’s chief executive didn’t come as a surprise to ‘Da Man.’ That’s because he called it exactly one year ago, but even he admits his prediction didn’t require much foresight.

February 24, 2014

A recent event made me think about the Queen of Hearts from Alice in Wonderland, the foul-tempered personification of blind fury who screams, “Off with their heads.” Of course, the Queen of Hearts is just a figment of Lewis Carroll’s imagination, and I’m certain he never met the Korean executive team over at Hyundai.

Hyundai and its sister nameplate, Kia, have burned through some of the best and brightest executives in the industry. One of my best industry friends, Finbarr O’Neill, was the first to lead Hyundai out of the wilderness and into the mainstream. No one seems to remember his two predecessors, Robert Parker and Doug Mazza. They were abruptly replaced, and O’Neill is generally credited for taking brand perception from junk to quality.

If you are a top-performing corporate hero at Kia’s and Hyundai’s North American operations, history tells us you’ll probably be marched off the plank with the first misstep.

Back in 2006, Peter Butterfield, then CEO of Kia Motors America, was escorted out of a dinner at a dealer meeting, taken to a back room, fired, and then marched out through the crowd in public humiliation. Then there was Bob Cosmai. He also left abruptly in 2006 after falling short of the company’s unrealistic sales goals. He was replaced by Steve Wilhite. Guess what happened to him?

Then there’s John Krafcik. Media outlets applauded the achievements and progress the company made under his leadership. Well, in December, Hyundai announced that Krafcik was “stepping down” on Jan. 1. But unlike most of his predecessors, Krafcik’s departure was void of any theatrics. Instead, officials said his contract was up and that he was simply “moving on.” Of course, that’s all bull poop.

As you are aware, I have built a reputation for calling shots before they happen. Well, I predicted Krafcik’s departure in the January 2013 issue of this magazine, two months after the Environmental Protection Agency found the OEM guilty of overstating fuel economy estimates. The headline was “Stupid Is as Stupid Does,” and here’s what I wrote:

“Two scenarios are possible: Krafcik will either remain with the company to sort through this disaster or he’ll leave the company. The right move is to keep Krafcik onboard. No doubt it’s going to cost both Hyundai and Kia a lot of money and somebody will ultimately have to fall on the sword. If it’s the latter, I believe — and you read it here first — Krafcik will be picked up by another major manufacturer in no time.”

Did I call it or what? Krafcik delivered record U.S. sales in 2012, launched the Genesis and Equus brands, fathered the Hyundai Assurance program, and generally won over everyone that met him. But even though Hyundai posted record sales of 703,000 units, the company’s market share percentage dropped from 4.9% to 4.3%.

Of course, the Koreans accept no excuses, even though they are comparing last year’s market share to 2011, when Hyundai’s share was 5.1%. But that was when the Japanese were on the ropes due to Tsunamis and recalls and the U.S. domestics were climbing out of bankruptcy.

This past December, the Koreans got the bill for the overstated fuel economy and had to pay a $210 million settlement. And that doesn’t account for the humiliation of having to admit they “overstated” fuel economy. Here’s how Jim Trainor, Hyundai’s spokesperson, described Krafcik’s exit: “The departure of John Krafcik from Hyundai Motor America has nothing to do, in any way, with issues regarding misstatements of fuel economy by the company. The issues are completely unrelated and there is no connection whatsoever.”

I guess we’re supposed to believe that.

Replacing Krafcik is David Zuchowski. The former sales executive assumed his new role as president and CEO on Jan. 1. Dealers like him and so do I. Of course, that won’t mean much for his life expectancy in his new position. If he’s just now moving to California, I’d advise him not to buy a house just yet. Rumor has it that Hyundai employees are already selling calendar squares on how long he’ll last. I bought the month of May 2016.

Of course, Krafcik will be just fine. My hope is he’ll land back at Ford, where his career started. In my opinion, he’d make an excellent czar to lead Lincoln out of the wilderness. As for Hyundai, it’s a great company with great dealers. But those at the top still need to check their rearview mirrors and listen for the sound of the Red Queen approaching.

Jim Ziegler is the president of Ziegler SuperSystems Inc. Email him at jim.ziegler@bobit.com.

Comments

  1. 1. David Ruggles [ February 27, 2014 @ 05:58PM ]

    You certainly DID call it. I recall it distinctly. Of course, I wish you had been wrong for the same reasons you cite.

    I'm sorry, but I not a fan of the way the Koreans do business. In fact, I detest it. I like their cars but refuse to but one because I hate their Korean leadership so badly. I wonder if anyone else feels the same way.

  2. 2. Chris Spensley [ February 28, 2014 @ 04:56AM ]

    "Calendar squares"- I literally LOL'd no really I did...nice one.

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Author Bio

Jim Ziegler

President & CEO of Ziegler SuperSystems

Jim 'Da Man' Ziegler joined the magazine in 2011 to deliver his On-the-Point message about the car business to dealer principals and store managers. He'll offer strategy advice on everything from sales and F&I to marketing in the digital age. Catch him every month at www.fi-magazine.com.

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