Half a century ago, South Korea’s auto industry was in its infancy. We recall its inauspicious start and chart its early progress.
With global sales(1) in 2020 of 6.52 million vehicles, Hyundai Motor is the world’s third largest auto manufacturer, behind Volkswagen Group with 9.31 million and Toyota with 8.90 million sales. Hyundai, which includes the Kia marque, overtook General Motors in 2019 and continues to move ahead of the troubled US giant, suffering less of a reversal in the Covid-affected 2020 market than either it or the two market leaders.
Fifty years ago, things were somewhat different. Hyundai was building just one Ford passenger car model under licence, while Kia was confined to building Mazda light commercial vehicles. Both manufacturers shared an ambition to grow their businesses substantially, and to be no longer dependent upon licenced models from manufacturers they aspired to rival in global markets.
The Hyundai Group was founded in 1947 as an engineering and construction company. It grew into a giant industrial and commercial conglomerate, encompassing businesses as diverse as shipbuilding and department stores. The automobile subsidiary was established in 1967 and signed an agreement with Ford to build the Cortina Mk2 under licence.
Hyundai decided that it needed to develop its own designs and made a key hiring in George Turnbull, formerly Managing Director of British Leyland’s Austin-Morris and the group’s truck and bus division. Increasing differences between Turnbull and the abrasive BL Chief Executive, Donald Stokes, over the management of the group precipitated his resignation in 1973 after 32 years. He arrived at Hyundai in March 1974.
At Austin-Morris, Turnbull had overseen the launch of the Marina in 1971 and that was exactly the sort of car Hyundai wanted to build in the first instance: a rear-wheel-drive conventionally engineered small to medium-sized model to build alongside the Cortina. Turnbull even brought a Marina saloon to South Korea, not as a benchmark for the new car per se, but to identify and avoid its flaws. The environment Turnbull found at Hyundai was extraordinarily different. Instead of the restive and militant BL workforce, Hyundai workers were highly disciplined(2) and respectful. They would routinely salute him as he arrived for work in his chauffeur driven car.
Turnbull hired a team of five British former colleagues and acquaintances from the auto engineering industry. A deal was struck with Mitsubishi for the supply of engines, transmissions and rear axles. Italdesign was commissioned to style the new car. This was an inspired decision because the resulting execution was neat and modern, lacking the ersatz and idiosyncratic detailing that overseas customers sometimes found unappealing in contemporary cars from Asia-Pacific manufacturers, notwithstanding their finer qualities.
The factory, built on the site of a swamp, was constructed from scratch and had operating production lines in a barely believable twelve months. Likewise, development of the new car proceeded with extraordinary speed. It was unveiled at the Turin motor show in October 1974 as the Hyundai Pony, although it would not go on sale for a further fourteen months.
Despite its fastback profile, the Pony was initially a four-door saloon. It had a wheelbase of 2,340mm (92”) and overall length of 3,970mm (156¼”). It was powered by Mitsubishi inline four-cylinder engines in either 1,238cc, 54bhp (40kW) or 1,439cc, 67bhp (50kW) forms, mated to either a four-speed manual or three-speed automatic transmission. Suspension, steering and brake components were derived from those used in the Cortina.
The saloon was followed with a practical pick-up derivative in May 1976 and a five-door estate in April 1977. Three and five-door hatchbacks replaced the original four-door saloon in 1981. With the Pony selling strongly in its domestic market, Exports to South America and the Middle East began in 1976, followed by Europe in 1979.
A small number of the original models made it to the UK before the Pony was given a facelift in 1982. Externally, the car received a sloping nose with large rectangular headlamps and outboard indicators in place of the twin round original items, and new, larger taillights and bumpers. The interior was also upgraded, and the model was given the designation Pony II. The Pony was by no means a sophisticated car, but it was cheap, reliable and well wrought, and established the Hyundai name in Europe and the US.
Hyundai’s second in-house designed model was the 1983 Stellar, a D-segment four-door saloon that was intended to be a direct replacement for the Cortina Mk V and even utilised the floorpan and suspension from the latter. Hyundai returned to Italdesign for the styling and Giugiaro did not disappoint, penning a handsome and crisp design that many described as either a four-door version 1981’s Maserati Biturbo or a scaled down version of Giugiaro’s 1979 Maserati Quattroporte III. Either way, it was a strikingly good-looking car, especially for the budget sector in which it was intended to sell.
The drivetrain was the familiar Mitsubishi fare, with the addition of a two-litre engine for the top of the range model. The Stellar was widely exported. In the UK, the press advertisements made mischievous reference to the Cortina replacement’s controversial styling that was alienating conservative buyers by picturing the Stellar next to a Sierra-shaped jellymould.
That the Stellar was priced similarly to the smaller Escort only added to its appeal. One UK customer demographic that fully-embraced the new Hyundai were mini-cab drivers, who found it perfectly suited to their trade and capable of, er, stellar mileages with its robust and proven mechanical package.
In comparison with Hyundai, Kia had a rather faltering and interrupted start to passenger car production. Founded in 1944 as a manufacturer of steel tubing and bicycle parts, Kia began building Honda motorcycles under licence in 1957 and Mazda light commercial vehicles in 1962. One of those models, the Brisa B-1000 small pick-up, was based on the Mazda 1000, which was also built in four-door saloon form.
Kia began building the saloon version alongside the pick-up in 1974. It also assembled the Fiat 132 and Peugeot 604 in small quantities, mainly for official use. In 1981 Kia was ordered to stop building passenger vehicles by South Korea’s newly installed military dictator, Chun Doo-Hwan. Apparently, Chun thought there was too much competition amongst South Korea’s passenger car producers and wanted Kia to concentrate on commercial vehicles instead.
Kia returned to passenger car production in 1986, working in co-operation with Ford and its Japanese partner, Mazda. It assembled a version of the Mazda 121, a small five-door FWD hatchback, and sold it as the Kia Pride. A year later, it expanded its range with the Concord / Capital, a licence-built version of the Mazda 626 / Capella medium-sized saloon. Introduced in 1989, the Capital was a lower powered and trimmed 1.5 litre version of the 2.0 litre Concord.
In 1992, Kia launched its first model based on an underbody of its own design, the Sephia / Mentor. This was a C-segment FWD four-door saloon, with a Mazda 1.5 litre transverse engine. Exports to the US and Europe began in 1994, where it competed against other budget-priced South Korean imports such as the Hyundai Accent and Daewoo Nexia(3). In 1995, Kia replaced the Capital / Concord with a new D-segment saloon and estate, the Credos / Clarus, again heavily based on Mazda underpinnings.
One rather odd diversion for the company was its purchase from Lotus of the design for the 1989 Elan M100 roadster in 1995. Developed under General Motors ownership, the Elan M100’s prospects had been undermined by the simultaneous launch of the Mazda MX-5, a RWD roadster much closer in spirit to the original 1962 Elan (and considerably cheaper) than the FWD Lotus. Kia fitted the Elan with a 1.8 litre normally aspirated engine in place of the Isuzu-sourced 1.6 turbo unit and relaunched it in 1996. A total of just 1,056 were sold over three years.
Unlike Hyundai, Kia lacked the financial resources of a large and well capitalised parent company. When the 1997 Asian financial crisis struck, the company was declared bankrupt and was rescued by Hyundai Motor, which took a controlling 51% stake(4). Thus recapitalised, future Kia models would be closely related to their Hyundai equivalents. One key hire for Kia in 2006 was Peter Schreyer from Audi. Schreyer was one of the design team for the original Audi TT and, as Kia’s Chief Design Officer, he brought a new, more European flavoured style to the company’s models.
Hyundai’s stake in Kia has been reduced and today stands at 33%, but it still controls its minority-owned subsidiary, and Kia in turn holds minority stakes in a number of Hyundai subsidiaries, so they are inextricably linked. Technology and platforms are shared extensively between the two companies. In 2020, total global sales were split approximately 60:40 between the Hyundai and Kia marques. The company has some way to go before it could challenge either Volkswagen or Toyota for global leadership, but its trajectory over the last half-century would make it unwise to bet against the Korean giant.
(1) Data from www.focus2move.com. The Renault-Nissan-Mitsubishi Alliance is excluded because no member has a controlling interest in the others.
(2) So disciplined, in fact, that they carried on working without complaint in temperatures as low as -7°C over the first winter because heating had not yet been installed in the newly built factory.
(3) A reworked Opel Kadett E.
(4) Beating a challenge from Ford, which was also interested in investing in Kia.
Author’s note: In 1974, the BBC Panorama documentary programme travelled to South Korea to interview George Turnbull about his new venture. Journalist David Dimbleby asked him at one point if he had misgivings about helping a potential competitor to put British jobs at risk. Turnbull replied flatly that, if he didn’t do so, somebody else, probably the Japanese, would. Dimbleby’s attitude was so revealing about the mindset at that time. Little did they see what was coming.