Inside Hyundai: What they’re saying about Apple

From Hyunjoo Jin and Stephen Nellis’ Hyundai wrestles with the risks of embracing Apple” posted Friday by Reuters:

“We are agonizing over how to do it, whether it is good to do it or not,” said a Hyundai executive aware of the internal discussions on the tie-up with Apple. “We are not a company which manufactures cars for others. It is not like working with Apple would always produce great results.”

“It is really difficult (for Hyundai) to open up,” this person said, adding that the South Korean company would likely to have to replace some executives to avoid a culture clash under any partnership with Apple.

“Apple is the boss. They do their marketing, they do their products, they do their brand. Hyundai is also the boss. That does not really work,” the person said.

“The Group is concerned that the Hyundai brand would become just Apple’s contract manufacturer, which would not help Hyundai in its effort to build a more premium image with its Genesis brand,” the insider said. Kia is also moving faster in terms of electric cars, and it has available production capacity at its Georgia factory in the United States.

My take: This from the same reporters who broke the original Hyundai-Apple story. Could be the same source.

12 Comments

  1. Michael Goldfeder said:
    Maybe the reporter went long Hyundai before they wrote the initial article. Really no different than many of our Senators who traded immediately on inside information provided as a result of Covid-19 briefings. Perhaps now a short position was taken on the backside of this newly created negative story. Just my $.02.

    1
    January 29, 2021
  2. Jerry Doyle said:
    This article makes more sense to me then the initial news article that came forth. I’m a car aficionado and am aware intimately of Hyundai’s efforts to mature its Genesis brand to compete in the premium luxury car market. Hyundai needs about 5 years more and the Genesis is going to take sales from other premium car luxury brands. For example, the Genesis 90 will be commensurate with Mercedes S class but about 20-30% less in price. If you want the S class, then you pay a premium for the brand, but you will get no more premium in build, reliability or performance. This is how good the Genesis 90 is moving its elegance forward in its luxury flagship models. It’s the same reason the Lexus flagship LS models have the highest resale value of all luxury cars on the market. It is due to Lexus’ premium build, reliability, performance and dependability among consumer rankings.

    This article also makes clearer sense because of Hyundai’s own organizational culture. I can’t fathom a working relationship with Hyundai where Apple always calls the shots. Ain’t gonna happen.

    4
    January 29, 2021
  3. Tommo_UK said:
    If I wanted a Hyundai I’d buy a Hyundai. Hyundai and Apple are not a good fit, no matter Hyundai’s grand aspirations.

    Apple’s car is unlikely to be a large sedan or luxury vehicle but a perfectly appointed high margin well fitted vehicle breaking all design performance and interior design paradigms.

    Hyundai may license a version of Apple’s self driving software and integration but I don’t see them being Apple’s production partner. There won’t be any switches or instruments from the Hyundai parts bin in an Apple Car. Better to build a factory in a new customs freeport in Northern Ireland or the U.K. which has enormous expertise and capacity in foreign car production, and export them back to the US and all over the world with the excellent sea transport links.

    3
    January 29, 2021
  4. Michael Goldfeder said:
    @Jerry: Not sure if you’re a sports fan, but the closest analogy I can make to your point about Hyundai and Apple not being compatible because of their unique and different DNA, comes from the NFL. The 1985 Chicago Bears had as their head coach Mike Ditka. A very tough Bear to love. His defensive coordinator was Buddy Ryan. Equally as tough to love. They didn’t like each other and that never changed. Yet they won the Super Bowl with a chasm that’s never been seen again in the world of sports as best I can recall.

    Perhaps both Apple and Hyundai can duplicate a similar success in the world of EV and autonomous vehicles. I understand your point entirely, but sometimes in the better interest of an organization’s success and bottom line, strange alliances have to be formed for the greater good.

    1
    January 29, 2021
    • David Emery said:
      There’s “like” and “can work with….” A corporation that has a strong quality culture that comes from top-down control may fit uneasily with a partner that has a widely distributed “do the right thing” ethic. But they could make that work much better than companies that don’t have quality as their primary focus.

      From a cultural perspective, seems to me that a Chaebol (“a large industrial conglomerate that is run and controlled by an owner or family in South Korea” – Wikipedia’s definition) would have a problem in a true partnership without a clear -division of responsibilities-. Now it’s quite possible that Apple and Hyundai could draw lines that benefited both companies, but preserved what each thought was their ‘core competency.’

      By the way, on a large military contract I worked on for most of the ‘0x decade, the large vehicle contractors vetoed the use of any software they did not write as part of their vehicle delivery. That was an interesting fight to watch, between the integrator’s desire to have a single software infrastructure, and the vehicle guys claiming total ownership of their domain. I was not impressed by the vehicle contractor’s software capabilities, but I did respect their need to own the system on which their deliveries depended.

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      January 29, 2021
  5. David Drinkwater said:
    When speculating on manufacturing partners, I think Volkswagen AG is an intriguing possibility. A wide range of products, from the Golf all the way up to the Bugatti, Lamborghini, and Ducati motorcycles.

    Don’t know how the gears would mesh, but it seems interesting to me.

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    January 29, 2021
    • Bart Yee said:
      David, personally I think that Porsche division would be the perfect tie in – highest quality and experience in drivetrain and suspension systems, very modern production capability, and engineering beyond peer. They have certainly done design consultation work for many many others. Once designed and fully validated, they could contract with Valmet Automotive in Finland who built Boxsters and Caymans for quite awhile and now builds some specialty models for Mercedes. Certainly very capable high quality manufacturing plus, just might take some of the EU heat off their back.

      https://www.valmet-automotive.com/manufacturing/

      The big thing for Apple is whether they can get the costs down to where they want them so that the prices charged are not exorbitant (relatively) or viewed as only for the wealthy (which may be true anyway depending on gross margins.)

      1
      January 30, 2021
      • David Drinkwater said:
        I know that Porsche is a part of VW AG.

        I skipped them as the middle ground.

        Ich bin Deutschfanatiker.

        … but I think BMW is too isolated to its own brand. VW AG is broader.

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        January 30, 2021
  6. Bart Yee said:
    IMO, any tie in with Hyundai /Kia could/would enhance the auto maker while pulling down Apple to some extent unless Apple gained full control and the factory was a contract maker – I agree that Hyundai is too big, too entrenched in its own projects, agendas, and frankly Korean culture to be in a subservient looking relationship with Apple. Now if Samsung had designs on a car of some sort, well then the Korean government would probably make it an issue of national pride complete with potential subsidies to all companies concerned. I’m frankly surprised they haven’t done a tie in already aside from Samsung owned Harman-Lexicon and Bose audio systems.

    0
    January 30, 2021
  7. Alan Trerise said:
    Possibly Hyundai has already taken themselves out of the running by blabbing about the relationship. Not a characteristic Apple has much tolerance for. Foxconn may be trying to prove they can manufacture cars to capture the Apple business. In any near term scenario the vehicles would need to be produced in the US. In that case Foxconn may want to get a copy of USMCA and determine if that is a regime they can work within.

    0
    January 30, 2021
  8. Steven Philips said:
    Ahhh, the heck with all this electric self driving stuff!
    Go BIG!!
    Look at the board of directors.
    Have Ferrari build the FIRST Apple Car. 🙂
    The Mac Pro of cars!
    Other “thin” cars can follow.

    (Actually, I thought it was a good article and I agree with Jerry.)

    0
    January 30, 2021

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