Hyundai builds 4 million vehicles annually today. By 2007, output is expected to be 5.5 million vehicles.

Proton? Production is now shy of 200,000 cars a year. 178,431 sounds about right. Perodua? 113,431 vehicles.

This is why Proton has no chance to give us good cars at fair prices. There is no economies of scale. How did Hyundai do it? They’ve been around since 1967. That’s 38 years. Proton? About 20 years. It was born in 1983. The first Proton Saga rolled off production lines in September 1985.

Even the local market share that Proton holds is dropping, can it compete internationally?

Let’s all face it. If Proton made cars that did not fall apart once it rolled off the production line, people would not turn to Korean makes.

If Proton’s quality was comparable to Korean Makes like Hyundai, would any of my blog readers still choose a Korean make? Can they voice out? Any particular reason?

Right now Proton is still in the middle of controversy and without a CEO, while Hyundai is gunning for Volkswagen AG and DaimlerChrysler AG, aiming to pass them and be ranked 5th in the charts as part of the world’s five largest automobile makers.

This vision is despite it’s income dropping and prices rising because of the rise in the Korean Won versus the US dollar which made Hyundai cars more expensive. But it’s time for Hyundai to ditch the price advantage if it really wants to move forward and improve its brand.

These are words from a Hyundai supplier Kazuo Ishikawa:

In Japan and the U.S., when people get to a certain level, when they get rich, they start getting lazy. The Koreans and the Chinese, they’re still hungry.

Ishikawa supplies wheels for Hyundai and Toyota in the USA.

With the protection given to Proton here, even before Proton is successful they have gotten lazy. They simply DO NOT LISTEN to consumers! The opposite is with Hyundai, where it’s chairman pastes the advice that J.D Powers III himself had given him in 1998. One of the points Powers had mentioned was that Hyundai was not listening enough to customers, and quality levels were an issue. Hyundai Chairman Chung swore that the 6 foot board with the advice plastered on it would not come down until Hyundai surpassed Toyota in quality control.

Is he working at it? Yes. Hyundai defects rates have dropped from 272 problems per 100 vehicles in 1998 to just 117 per 100 vehicles in 2004.

Hyundai has even penetrated the China market successfully, despite strong competition from the local car manufacturers. Residents in the capital, Beijing are seen ignoring China-made Charade taxis manufactured locally by the Tianjin FAQ Xiali Automobile Co, where instead they rather wait for a Hyundai Elantra taxi to pass by.

Hyundai is in Japan, selling it’s cars via Mitsubishi dealerships. Hyundai is in India, where it is the third largest automobile maker there. A 1.1 billion euro factory is being built in Slovakia for Kia, while in Malaysia we still talk about how Proton managed to build a 1.8 billion ringgit factory without getting help from the government.

Chung is known as the “Tiger” among Hyundai employees personally inspects Hyundai assembly lines every morning and scolds workers personally when he finds defects on cars being assembled. In Malaysia we only have a Thundercat Tiger on the Proton badge.

So what happens when Proton drivers send their cars back when they find defects? They hear “Biasalah, Proton” from the service centers.

You can see the huge difference in attitude between Hyundai and Proton’s attitude.

Hyundai’s manufacturing methods have top-down control of the corpoerate ladder exercised through personal relationships instead of formal bureaucracy.

Hyundai’s struggle is not over yet. It’s survival in the international market depends on how it positions itself despite the strengthening Korean won which are driving up the prices of it’s cars.

So really… what is the Korean advantage? I’d say it all boils down to attitude.