Hyundai's Theo Van Doore: Face behind the Brand

Theo van Doore - Director of Sales and Marketing Hyundai Motor Company Australia

Theo van Doore has been in the motor trade for nearly 40 years starting his career as an apprentice motor mechanic back in 1969.

Since then he has worked in parts, sales and as a dealer principal which he says has given him a very well-rounded background and the ability, knowledge and skills to head up the marketing and sales operation of a major mainstream carmaker. He has been with Hyundai for the past six years and took over as director of sales and marketing when the Korean parent company took control of the local distribution three years ago.

PRODUCTS

CP: What is in the Hyundai lineup at the moment?

With the relaunch of Grandeur in February this year, we provide a full gamut of passenger cars now. We start with the $13,990 Getz and work our way through all categories and small and medium SUVs through to the luxury end with the launch of Grandeur and new Sonata.

CP: Is there anything that you would like to have that haven't got, either product that is offered in overseas markets or just something on the wishlist?

In my opinion we have a four-cylinder range that most manufacturers would die for. We have been very fortunate in recent months with the fuel prices where they are that we have been poised ready with an exceptionally good lineup. If you look at our Sonata for example that competes in the Commodore/Falcon category, we have a 2.4-litre engine in the base model right through to the 3.3 V6 in the top of the range Elite model. I know that Holden, Mitsubishi and Ford would be very pleased to have that type of configuration in their passenger cars.

I suppose one of the areas that I would like to be a bit more aggressive is in light commercials. The success of Hyundai's growth in Australia has been very much on the back of passenger cars and if you look at what we have achieved in terms of growth -- last month we were number six in the Australian market -- we have done that without commercial vehicles whereas most of the other top five have commercial vehicles. We don't have that so we are on the back foot a bit when it comes to commercials but we are working on that and we will probably have something next year.

CP: What about in terms of sports models? You have talked about lifting brand image and that is an area where a lot of companies look to boost their brand image?

I think you will find that as a consequence of Hyundai getting into the World Rally Championship in 2008 you will see a fair amount of performance motoring on the back of that. It just makes an enormous amount of sense. One thing that I do know about Hyundai is that they are very clever about the way they do things. So they will say "we are going to build a sports car, how will we sell it, how are we going to get the sports car credentials" so they will couple up to the motorsport. I know it is a turbocharged engine they are going to use and Hyundai now have some very advanced R&D areas on engines and transmissions. In the next two to three years as they get stronger in Europe and the US, there is an expectation from consumers in those countries that a successful manufacturer does have muscle machines, so there is no doubt in my mind we will see that.

CP: You mentioned fuel prices and there is a bit of a rush towards diesel in Australia at the moment, is there anything from Hyundai in that regard?

I think most manufacturers are poised with diesel engines, I know we are. There are a couple of important things. First of all the fuel in Australia is not good enough for the modern diesel engine. With the introduction of diesel Euro IV standard in August/September this year, you will see a flurry of diesel engines being launched by the manufacturers. We are ready for it but again our engines are so advanced now that they do need the Euro IV fuels. The other thing that you have to consider is that a lot of Australians do have a ceiling that they are prepared to pay, remembering that 70 per cent of the cars we sell are to mums and dads, and they may not be prepared to pay extra for a diesel engine.

CP: What do you think makes Hyundai products stand out from their rivals and competitors?

I think Hyundai have cornered the affordable technology market. If you look at what we have done in terms of providing ESP, traction control, and ABS brakes, this type of thing is traditional on vehicles like Mercedes Benz but we have all that technology in a motor car for $30,000. And on the Getz Protectz pack for example, we provide ESP, four airbags and ABS brakes for under $16,000. There is nobody else comes near us. In all the research we do, there is a very clear indication that people are looking for safety.

CP: So that would be your main point of difference?

That is the direction we are heading. If you look at all our lineup, there is only one product we don't provide ABS brakes as standard and that is on the base Getz and that is designed more for the rental car business than the private buyers.

CP: Who do you see as your major target market, who is Hyundai trying to appeal to in the broad spectrum of car buyers out there?

We are very accepted in the present market with the mums and dads. The mums and dads see Hyundai as a very good alternative to the more expensive Japanese or locally manufactured product. One of the markets we are working very hard on at the moment is the novated lease/salary sacrifice area. There is a substantial migration of buyers, particularly in the V6 or SUV market, that traditionally to buy a new car, would get a second mortgage on their house or they would get a personal loan. Those people are now migrating towards salary sacrifice and novated leases so there are enormous opportunities for us in those areas and we are working very hard to attract that type of buyer and Santa Fe will go a long way to help us do that.

CP: You mentioned safety as one of the priorities that people look at when they are buying a new car,  but there are a number of factors. Just looking at those different factors how would you rate Hyundai products against its rivals first of all from a safety perspective?

Santa Fe for example has ESP standard in our base model, and we have airbags that go from the front row seat all the way through to the rear. There is no nobody else that provides that level of standard features on a base model for under $36,000. We are providing technology at affordable prices and the most important technology I consider is safety technology. There are very few categories that we don't lead in terms of safety for the price.

CP: How would you rate Hyundai products against its competition in terms of its driveability?

One of the challenges we have, particularly against local manufacturers, is that their cars are developed for Australia. We have a very strong involvement with Hyundai in Korea and we are working on developing and improving our suspensions to suit local tastes. Australians like hard firm solid suspension and a lot of this comes from the traditional Holden Ford and Mitsubishi product that they buy here.

So they have a preference for this type of suspension, whereas we develop European suspension for our cars. The suspension is firm but it is a good compromise between the sports car handling that some people expect and the softer style suspension that Americans expect in their motor cars. So we have European suspension and if there is any area where we can continue to improve, it is in that area.

CP: What about in terms of fuel economy and emissions, where would you rate Hyundai against its rivals?

If you look at Santa Fe because that is a topical car at the moment, we have got a 2.7-litre engine and we compete against Ford Territory that has a 4.0-litre engine. We have specifically gone for the 2.7 because we are looking for the fuel efficiency of a smaller V6 as opposed to a much heavier higher fuel consumption 4.0-litre engine. So we are very conscious of fuel economy. Because of our strength in the European market, Europeans don't have big engines, they have fuel-efficient engines and that is where we sit whereas Australians still like, or used to like, big gas-guzzlers, a bit like America. But Australians are learning that having those big cars and V8s is nice but there is a cost to pay.

CP: One of the other things that people look at is a combination of features, value and affordability. Traditionally Hyundai's price point was at the bottom, you have slowly moved that up so where do you think you rate in terms of value and affordability?

As I said before, in terms of affordable technology we still do very well in that area. Yes we have put our prices up and I suppose the testimony of how people accept those price increases is the fact that we have grown our business by almost 60 per cent in three years. So people are prepared to pay for it. When you add to that the elimination of drive-away, which we did three years ago which in itself increased the price of the cars by about $2000, there is absolutely no doubt that consumers still accept our products and see them as great value.

THE BUYING EXPERIENCE

CP: How many dealers have you currently got and are there any areas where you would like more?

We have got about 140. Hyundai went through a really bad period in the early 2000s and the dealer base remained very loyal to us and it takes no skill to just put any number of new dealers in place without any consideration for our existing dealer base. But we have a five-year plan and the idea is that we will grow the businesses, as demand for the product gets stronger. We will probably have by the end of this year another four new dealerships in place and by the end of 2010 we will probably have another 15 dealerships in place.

It is very important that we provide a level of service to our customers and we are doing that by looking at authorised service points. People are prepared to drive 100km to save a few hundred dollars but they are not prepared to drive two minutes to get their car serviced. 

So what we are doing is, in our larger PMAs, our dealers are providing authorised service centres so a customer can conveniently have their car serviced. So adding large numbers of dealers is not necessarily the right way to do it, but certainly convenient service points is the right way to do it.

CP: Apart from asking your dealers to have these service points, how else is Hyundai trying to improve the dealers in terms of facilities or sales training?

Well, to start with, facilities. Our dealers will spend close on $20 million this year on facilities, last year they spent $25 million on facilities. One of the mistakes we made as an organisation in the past, in the light of being a very successful distributor, was that while the dealers were making good money out of the Hyundai brand, we allowed them to invest that profit back into other manufacturers and products. We have become insistent now that for us to be taken seriously as a more upmarket prestige style car company, we must provide facilities that reflect that. If you look at most of the successful brands in Australia, the Australian consumer has a mindset towards the perception of the organisation through the facilities that they go to to buy the motor car. Good facilities these days are the price of entry, regardless of what you are selling. So we realise that and we have got to give people confidence in the brand and a way of doing that visually is through the facility.

CP: With most Hyundai dealers being multi-franchise, is that now a requirement that whatever money they make out of Hyundai cars must go back into the brand?

They have new corporate ID they have to work towards. We reward our dealers for doing the right thing and building facilities that conform to our corporate identity. We have four categories for our dealers and there are certain sized showrooms they must have. Our dealers are pleased to do that because there is an investment return now because the franchise is very much sought after.

CP: One of the things that is still often criticised in the car industry is the way people get treated in terms of sales: what is Hyundai doing to help improve that?

We have an outside consultancy to do our training and they have head offices in each of the capital cities so we are able to provide a high degree of training and we make an investment in excess of $1 million a year providing dealership training. We also do a mystery shop on our dealerships every six to eight weeks and then from the results of that we consult and work with the dealer and their sales management team to ensure that we provide a high level of service.

Because our cars are so technically refined now, unless the sales person sells the features of the car, people don't understand. Like ESP, very few people understand exactly what ESP is and how it works. It is like ABS brakes was five years ago, people didn't understand it and didn't want it. Now it is the price of entry and I believe in three years time ESP will be a price of entry into most categories of motor cars. So the secret to capitalise on that technology is having good effective salesmanship that actually teaches the customer the benefit of this refinement and technology.

Also every three months, we travel around Australia rewarding people for doing the right thing based on mystery shop results, based on sales results and my senior management team has an opportunity to have contact with the grass roots.

By doing these awards nights every three months we have the opportunity to listen to what the sales managers are saying, we listen so we have this connection and the information is not filtered. So a combination of the information from the dealer network and the relationship we have with our training company all moulds together to make sure that we are doing the right thing, at the right place, at the right time with the right people.

CP: Are there any other services that Hyundai offers in terms of branded finance or insurance?

We have been working on it and in the next couple of weeks we are going to make an announcement. We have been working with a financier over the past three months and we will make some pretty exciting announcements shortly on Hyundai branded finance and insurance.

AFTERSALES

CP: What is Hyundai doing as a company to help improve costs in terms of parts and service?

As I mentioned, in these larger PMAs, we are not asking dealers to build supersites, we are asking dealers to look at their business in a more functional way even to the point of decentralisation. It is a lot more cost effective to build a five-bay workshop in a suburb than trying to convert your 20 bay workshop to a 50 bay workshop. So the requirements that we ask of them are realistic.

We also have different levels of spare parts customers can buy for the vehicle. They can get a set of disc brake pads from the factory for example and they are X price and we have Hyundai approved disc brake pads that are probably half the price. So we provide that directly to our dealerships so we have got control to make sure that the quality of the parts that are put on the motor cars is there and the customer makes the choice.

We realise that the owning experience of a motor car these days is a very important component of the whole process. Because we have such a high degree of mums and dads buying our cars, we have to have a very competitive service program that ensures they keep coming back to the dealerships for the work to be done.

CP: Is there anything being done to improve actual regular maintenance costs either by extending service intervals or reducing the amount of work that is required?

That comes from the technology. The whole owning experience of a motor car is changing dramatically and it is important that the cost of ownership is competitive. I am a motor mechanic by trade and in my day we used to fix things, now we replace things so you have got to be able to diagnose effectively.

CP: Probably the biggest cost to consumers is depreciation: what is Hyundai doing to help improved used values on its products?

Because of my extensive experience in retail, that is an area that I have been working on since the day I started working for the company. Under HADA [the previous independent Hyundai importers] there was no consideration to the residual value of the product at all and we would be very responsive to the marketplace and the way we would do that would be to change the price.

Accent for example, I remember changed five times in one year. And when you change it and revaluate a product, it has an immediate impact on the residual value. When you drop the price by $2000, it has an immediate reaction.

In the past three years, we have not reduced the price on any of our cars whereas in the marketplace there is a strong reliance on doing that to maintain a level of competitiveness. We have been able to remain competitive and respond to the market without having to reduce the price and therefore not have a negative effect on the residual value. We are very proud of our residual values and they have lifted and we have got strategies to make sure that continues.

CP: Lastly, why should Joe Punter out there buy a Hyundai over the competition?

The vision for our company now is affordable technology. With the technology we are fitting to our cars, our two airbags and ABS that we are now fitting in most of our products as standard, you get an enormous amount of safety for you and your family at a very affordable price. You can buy a car with ESP, ABS brakes, and four airbags for $16,000.

There is very few manufacturers can do that. It is affordable technology and that is the key. We have got strong resale value and our styling has come such a long way from the Excel days. We really do have a car for every person, very affordable technology, good strong resale value and a very affordable ownership proposition.