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Hyundai Motor U.S. names new chief, Krafcik out

John Krafcik, president and CEO of Hyundai America introduces the company's new cars during the 2013 Los Angeles Auto Show in Los Angeles No
John Krafcik, president and CEO of Hyundai America introduces the company's new cars during the 2013 Los Angeles Auto Show in Los Angeles No

By Bernie Woodall

DETROIT (Reuters) - Hyundai Motor Co <005380.KS> said on Friday its U.S. chief, John Krafcik, is stepping down after his contract was not renewed and will be replaced by the U.S. sales chief David Zuchowski.

During Krafcik's five-year tenure Hyundai's share of the U.S. market rose to as high as 5.1 percent for 2011 from 3 percent in 2008. But it has fallen to 4.6 percent due mainly to production capacity constraints.

Zuchowski is 55. He takes over on January 1 after the surprise announcement of Krafcik's departure. Krafcik's contract expires at the end of the year.

Neither Zuchowski nor a Hyundai spokesman gave any reason for why the parent company in South Korea did not offer Krafcik a contract extension.

Krafcik, 52, led the U.S. arm of Hyundai as it set sales records using innovative marketing techniques including a program that allowed Hyundai buyers who lost their jobs during the recession in 2009 to return their new cars.

But Krafcik also oversaw Hyundai as the company was cited by the U.S. Environmental Protection Agency for overstating fuel mileage claims on its cars in 2012.

Last week, Hyundai reached a preliminary $210 million settlement on the fuel mileage issue in a class action suit. Kia Motors, which is Hyundai's sister company but is mostly operated separately in the United States, reached a settlement of $185 million last week.

Zuchowski said in a telephone interview on Friday that Krafcik's departure was a surprise even to "those that were in the inner circle" at Hyundai's U.S. headquarters.

A Hyundai spokesman said Zuchowski is not an interim leader and Zuchowski said the company is undergoing "a very orderly transition."

Analyst Karl Brauer of Kelley Blue Book said Krafcik "has a strong relationship with numerous power brokers and an enviable record after five years at Hyundai. He oversaw the Korean carmaker's growth while developing several innovative branding exercises. He would be a powerful addition to any automaker's executive team."

Zuchowski said Hyundai has a goal of returning to 5 percent U.S. market share, but he said it may take a couple of years to get to that level of sales again, considering the supply constraints.

SOUTH KOREAN MOTHERSHIP

"We're working very closely with our Korean mother ship to secure additional production from Korea as well to make sure that we can maintain our market share growth," said Zuchowski.

"We think and our parent company thinks that 5 percent (U.S. market share) is very important and that is one of our key priorities, whether it's done next year or done the following year, that's absolutely what we want to do."

He said 2014 will be an important year for Hyundai as it rolls out a new version of its flagship vehicle, Genesis, a full-sized, luxury sedan, in the first half of the year and a new Sonata in the second half.

"I would say that my biggest challenge is to make sure that we have an effective and successful launch of those two products," Zuchowski said.

The Genesis was named 2009 North American Car of the Year and the Sonata is credited by executives from rival Toyota with reshaping the U.S. midsize sedan market when it was last revamped in 2009.

Genesis sales were down 8 percent through November and Sonata sales were down 10 percent.

Hyundai's U.S. sales will set a record in 2013. But through November, its share of the U.S. market was down because its sales were up 2.2 percent as the overall industry sales rose 8.4 percent.

Hyundai has 824 U.S. dealers, a number that the company does not plan to greatly expand, Zuchowski said.

One of those dealers, Brad Benson of Brad Benson Hyundai in South Brunswick, New Jersey, said that while Krafcik "did a great job," as a dealer he is happier with a "sales guy" as the head of the company's U.S. division.

"Dave Zuchowski has been a huge part of this company behind the scenes for quite a while," Benson said in a telephone interview. "He's much more involved with the dealers. He's so down to earth, but he really knows how to sell cars."

Zuchowski joined Hyundai in February 2007 and previously had been with Mazda Motor Corp <7261.T> and Ford.

Before coming to Hyundai in 2004 as head of product development and strategic planning, Krafcik was with Ford Motor Co and the venture between General Motors Co and Toyota Motor Corp <7203.T> that built cars in a jointly run factory in California.

(Additional reporting by Deepa Seetharaman and Ben Klayman in Detroit; Editing by Cynthia Osterman and Leslie Gevirtz)

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