Hyundai’s U.S. Chief Is Out, as Automaker Seeks to Rekindle Growth

Just four months ago, Hyundai Motor was celebrating a key achievement — the introduction of a new line of luxury cars sold under the name Genesis.


Supported by a multimillion-dollar National Football League promotional campaign, Genesis had been an ambitious bid to join the likes of Mercedes-Benz and BMW in the highest echelon of the auto industry. And it was meant to rekindle growth for once-hot Hyundai, which has cooled considerably in recent years.


But it has been a bumpy ride for the Genesis brand in the United States, and on Wednesday the South Korean company unexpectedly replaced its top American executive, David Zuchowski.


Mr. Zuchowski, who had been promoted to president and chief executive of Hyundai Motor America at the beginning of 2014, has left the company, the automaker said in a statement.


W. Gerald Flannery, the American unit’s general counsel, was named interim president and chief executive.


The company did not elaborate on the reason for the change, saying only that Mr. Flannery would focus on “enhancing the company’s brands, accelerating change for growth and customer satisfaction.”


Word of Mr. Zuchowski’s departure was first reported by Automotive News. Mr. Zuchowski could not be reached for comment.


The challenges that Hyundai faces are well known. Sales growth has been sluggish the last few years. In the first 11 months of this year, Hyundai’s sales grew by only 1.3 percent, to 707,485 cars and light trucks, from the comparable period in 2015.


In contrast, a corporate cousin, Kia Motor, an affiliate controlled by the Hyundai group, has seen sales rise by 3.8 percent, to 593,245 vehicles.


Although Mr. Zuchowski was in many ways executing a strategy devised at headquarters in Seoul, the company has a history of abruptly dismissing American executives when business falters.


A big part of Hyundai’s problem is that the Genesis arrived at the wrong time, when Americans are flocking to sport-utility vehicles. While gasoline remains cheap, they are turning from small and midsize cars — Hyundai’s previous strength.


Last month, amid signs the Genesis was underwhelming the market, Mr. Zuchowski used the Los Angeles Auto Show to revamp their line of S.U.V.s. He promised that Hyundai would increase the size of two current models, the Santa Fe and Tucson, and add to its lineup a small crossover — a lightweight, fuel-efficient S.U.V.


“The market is not interested in sedans,” said Matt DeLorenzo, an analyst at Kelley Blue Book, a research firm. “Genesis needs a much wider product range, and it needs S.U.V.s, before it can be a success.”


The Genesis line now offers two model, both sedans: the G80, with a starting price of about $40,000, and the larger and more luxurious G90, priced from about $68,000.


Since August, Hyundai dealers in the United States have sold 5,215 Genesis cars — far fewer than the competing models from Lexus, Mercedes and BMW.


Even Scott Fink, a member of Hyundai’s American dealer council advisory board, had trouble expressing much enthusiasm for the Genesis.


“So far it’s going O.K.,” said Mr. Fink, owner of a Hyundai franchise in New Port Richey, Fla. “It’s just getting going, and it’s going to take time.”


It has not helped that the G90 has been in short supply.


Previously, Hyundai offered luxury models called the Genesis and the Equus. About 350 dealers continue to sell those vehicles, but the new brand may be limited to around 250 dealers.


Some dealers wanted to sign up to represent the new Genesis brand, but the cost for new signs and other modifications to their dealerships, at upward of $100,000 or more, was unappealing.


“In the end, for the brand to be successful, we can’t have as many dealers as we have today,” Mr. Fink said.


The Genesis G80 and G90 are imported from Korea, which is a factor in the shortage of G90s. About 40 percent of the vehicles Hyundai sells in the United States are made in the United States. It operates a plant in Montgomery, Ala., and also assembles some models at a Kia plant in West Point, Ga.


Hyundai is the most recent automaker to run into difficulties while trying to introduce a new luxury brand. While Toyota has had great success since it added Lexus more than 20 years ago, neither Honda nor Nissan has done as well with their premium marques, Acura and Infiniti.


Mr. DeLorenzo said it would be hard to attract luxury buyers as long as Genesis cars were selling in the same locations as the lower-priced Hyundai models.


Hyundai enjoyed rapid growth in the United States from 2008 through 2013, helped by its Sonata sedan, which the company had redesigned with a curvaceous look. It also priced competitively against the giants of midsize cars, the Toyota Camry and the Honda Accord, and included side airbags and an electronic stability control system.


Hyundai had similar success with a smaller car, the Elantra, and soon Hyundai was seen as a serious competitor to Toyota, Honda, Ford Motor and General Motors.


As sales growth began to slow, Hyundai and Kia came under criticism in 2012 after United States regulators found that the company had been overstating the fuel economy numbers for about a third of their models. The companies eventually agreed to pay the government $300 million to settle the matter.


Mr. Fink, the Florida dealer, said he was happy with the job Mr. Zuchowski was doing. “Dave was a great leader,” he said.


Mr. Zuchowski joined Hyundai in 2007 as a top sales executive. He had previously worked at Mazda Motors and Ford.


“We appreciate Dave’s decade of service to Hyundai, especially his leadership as president and C.E.O., which has made us a stronger organization,” Mr. Flannery said.



Correction: December 21, 2016



An earlier version of this article misstated a 2012 finding by United States regulators about fuel-economy claims by Hyundai and Kia. The government found that the automakers had been overstating fuel economy numbers on about a third of their models, not that they had overstated the figures by as much as a third.




Hyundai’s U.S. Chief Is Out, as Automaker Seeks to Rekindle Growth



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