Part 2--Hyundai, the Excel, and the 1986 U.S. Launch

By Don Southerton

On February 20, 1986, Hyundai Motor Company began selling the Excel, their latest production model, in the United States. Building on the success of the original 1975 Pony and then an updated 1982 Pony II, by the mid-80s Hyundai was ready to introduce a new front wheel drive X-1 model. They were also confident enough to tackle the world’s largest car market—the United States.

Hyundai X-1 Excel

Following a common practice in the automotive industry, the X-1 was badged under a number of names depending on the market. For example, in Korea a sedan version was sold as Hyundai Presto, while in Europe the new X-1 kept the original Pony badge.* For Americans, the X-1 would be known as the Excel--with a reputation for low cost, breaking sales records and, sadly, a tainted quality image.  


Beginning in 1976 and prior to launching in North America (with Canada in 1985), Hyundai was exporting the original Pony to a number of markets. Today little recognition is given to these overseas operations and the teams that led these efforts. Early Pony export markets included:   

• Honduras, Guatemala, Panama, El Salvador, Ecuador, Colombia, Chile, Argentina, and Paraguay in Central & South America 
• Egypt, Bahrain, and Oman in the Middle East
• Nigeria, Gabon, Sierra Leone, and Ivory Coast in West Africa,
• with Greece in Southeast Europe.

To test the Northern European markets, Hyundai opened their first overseas’ subsidiary “Hyundai Motor Holland” in 1978.  Presented in January 1979 at the Rai Motor Show held in the Netherlands, the Pony was then introduced locally in the Netherlands, Belgium and Luxemburg later that year. In 1980, the car was launched in the UK.

Hyundai Motor Holland (Photo courtesy Mark Juhn)

In a broader context, this international effort was part of the Korean government push for a strong export-driven economy. The X-1 would play an important role in furthering this plan. To produce the new Excel, Hyundai invested an estimated $500 million in Korean production facilities with an annual capacity of 300,000 cars. The Excel launch also marked a new milestone for Korea and Hyundai--sufficient mass production capacity, localization of parts, and the logistics to tackle the world’s largest car market. Entering the U.S. market was critical not only to Hyundai’s success but also for the Korean car industry to survive in the global automotive market. As today, few small car OEMs can survive when economies of scale are needed to keep cost down and the companies profitable.


Expectations within the Hyundai organization and their United States subsidiary were high in the months leading to the U.S. launch. In particular, car dealers across the U.S. were eager to acquire a low cost import brand. Hyundai Motor America would receive over 2000 applications for 150 dealerships. 


Record Sales
When launched in 1986, the Excel was offered in a variety of trims and body styles.  With prices starting at $4,995, the Hyundai Excel appealed to many, quickly setting a record in only 4 months for an OEM selling the most automobiles in the first year of business. Reflecting popular opinion Fortune Magazine even voted the Excel  “Best Product #10.” Excel sales for 1986 reached an impressive 168,882 cars. Moreover, Hyundai Motor Company Korea’s cumulative production topped one million vehicles. 

1986 Hyundai Motor Ad

The Excel was popular and perceived to be competitive when compared to the growing number of Japanese imports of the mid 1980s. Sadly, quality issues soon surfaced. Common complaints were that the body panels were wavy, the paint faded and window cranks were often faulty.  As a result of consumer perception, sales dropped and a number of dealerships abandoned their franchises. Frankly, this is no surprise. Americans with their love of cars have long been harsh on models not living up to expectations. That said, the attacks on the Excel never approached those against the Yugo or even American models, for example the Ford Edsel of the 1950s. In reality total sales by the end of the second year were considerable at 263,610 vehicles in a down U.S. car market.

Lessons Learned

Despite a decline in sales and tarnished image, rather than dropping out of the world's largest automotive market Hyundai would learn from the Excel. By the late 1990s and early 2000s and with leadership changes at Hyundai Motor Company, the OEM would invest heavily in the long-term R&D, design, manufacturing, and quality of their vehicles. More significantly, a bold “10-year--100, 000 mile Warranty” introduced in the U.S. in 1998 compelled the OEM to improve quality or the company would suffer huge financial consequences covering the warranty repairs. This improved quality along with gradually better consumer perception of the cars heralded what is seen today as a remarkable transformation in brand image and sales at record pace. 

* The hatchback model version of the X-1 was also sold in the Mitsubishi Motors in the U.S. from 1987 to 1994 as the Mitsubishi Précis. 

Special thanks to Mark Juhn, longtime Hyundai and Kia Motors’ senior executive and international automotive authority. 


This article is from content included in the forthcoming The Hyundai Way book. 
For more details, see  http://www.facebook.com/TheHyundaiWay