New cars, high MPG and an excellent warranty are propelling this Korean brand.

I’ve been following the automotive market for years and am able recall when I first set foot in a Hyundai showroom in 1986 to take a look at its lone model, the compact Excel. I stopped in with three other avid car fans and friends, and the one thing that surprised us was the car’s low price—lower than anything else sold in that category.

Hyundai carThat was the only good thing we could say about Hyundai, a company we barely knew how to pronounce (rhymes with Sunday) and a model of suspect quality. Indeed, jokes that the company’s name stood for—hope you understand nothing's drivable and inexpensive—began to surface, a facetious reference to the company’s quality problems.

Today, Hyundai Motors is a far different and much larger company. Coupled with Kia to form the Hyundai Kia Automobile Group, this company is now the fourth largest automaker in the world, just ahead of the Ford Motor Company and only trailing GM, Toyota and Volkswagen. Poor quality hasn’t fueled sales, rather a determination by company management to continuously improve and expand its product line, by including the following steps which have won the consumer’s heart:

Generous Warranties: It took Hyundai more than a decade to improve quality enough that it was no longer the butt of jokes. By that time the damage had already been done and consumers weren’t interested. To counter earlier perceptions and prove that its product line had improved, the company introduced an eye-catching 10-year powertrain warranty at a time when most automakers had 3-year warranties. Hyundai’s warranty covers the powertrain for 10 years or 100,000 miles and offers extended, though shorter, periods of protection on vehicle workmanship. Its 7-year rust protection warranty and 5-year roadside assistance plan still lead the industry.

Exceed Expectations: It isn’t good enough that your car company meets expectations. It must exceed them. Once consumers realized that their cars weren’t likely to fall apart before loans were paid off, they discovered something else: Hyundai cars were priced lower than the competition and had more standard content. Back when automakers offered an AM/FM radio standard, Hyundai kicked in a CD player. Air conditioning became standard on most models. Today, the compact Elantra offers heated rear seats, something usually found in only luxury cars.

Build Trust: Just when the worst of the “Great Recession” kicked in, Hyundai did the unexpected: it introduced “Hyundai Assurance,” its consumer guarantee program. The automaker guaranteed to take back an owner’s car if he lost his job—with no hit to the consumer’s credit report. Hyundai was telling shell-shocked Americans that it was okay to buy a car without worrying down the line that unemployment would turn their lives upside down. The plan worked: Hyundai’s sales continued to grow during the downturn even as mostly everyone else registered double-digit losses.

Be Defined: In marketing, it is dangerous to allow others to define who you are, given that negative perceptions often make the most noise. Hyundai had that problem early on, but today the Korean automaker is defined by its many pleasant surprises. Its cars are stylish, lead in fuel economy and continue to present a level of value not found in most comparable vehicles. Consumers know that they’re not just getting a great car, but they’re paying less, getting more content and are maximizing their fuel economy.

By no means is Hyundai Motors perfect. But, they’ve done what few manufacturers have been able to do—go from worst to first in perceptions. Positive perceptions build goodwill and Hyundai has plenty of that to go around.

Photo: AutoTrends