Hyundai CEO: Big change needed

CHICAGO -- The top executive of Hyundai Motor America said the auto industry must take drastic steps to survive, including changing its business approach, limiting executive salaries, raising fuel economy standards and embracing environmental goals and federal mandates before the government even asks.

"In the U.S., we are viewed for the most part as a slow, dim-witted industry that is typically unresponsive to consumer and environmental needs," John Krafcik, Hyundai's acting CEO, said in a keynote speech Wednesday at the Chicago Auto Show. "Americans would rather go to the dentist than visit a car dealer."

Krafcik said the U.S. auto industry was undergoing a "revolutionary time" and far-reaching steps were needed to build from the economic and cultural shift unfolding. Last month, vehicle sales in the U.S. were down 37 percent -- the worst performance in nearly three decades. Hyundai, however, was one of the few automakers to post a gain -- with sales up 14 percent.

"Turning our industry around will require some revolutionary thinking," he said.

Improving fuel economy was "an indisputable social good" and automakers should do everything to exceed federal standards, he said. Last year Hyundai announced it would achieve a fleetwide average of 35 miles per gallon by 2015, five years ahead of federal standards.

"We cannot count on elected officials and policymakers to determine what is best for our industry -- nor do any of us want them to," Krafcik said.

He pointed to the auto industry's success with adding safety features such as electronic stability control to vehicles before federal laws required them to do so.

Krafcik proposed limiting executive compensation, such as making it a multiple of an average employee's salary, and setting strict policies for employees accepting gifts or throwing lavish parties or outlandish media launches.

Not everyone agrees with Krafcik's approach, however.

Stephanie Brinley, an industry analyst for AutoPacific Inc., said the speech may touch on obvious hot button issues, but it doesn't address some of the complexities the auto industry may deal with.

"I am not sure we're in a revolutionary period," Brinley said. "We've had recessions before and we've gotten through them, we'll get through this one as well. Setting a limit on how much money someone can make is too much."

She added that staying ahead of federal fuel standards may be a good idea but for companies with full lineups, the task is more daunting, especially when the standards can change. She noted California's efforts to curtail tailpipe emissions, a measure that would require improvements in fuel economy standards just for the state alone.

Ed Peper, Chevrolet's general manager, declined to comment on the executive compensation issue, but added that it's imperative that the auto industry continue to change its perception with consumers.

"This may be a revolutionary time," Peper said. "I've never seen a time like this before."

Building a fuel-efficient fleet only makes sense and becoming good stewards toward the environment does as well, Peper said.

"Concern for the environment is important to our customers so it must be important to us," he said.

Krafcik said the first step to recovery begins with owning up to mistakes the industry has made. Much of the criticism leveled at carmakers contains some truth, he said.

"Part of today's revolution is about accountability," he said. "I believe that in standing up and declaring ourselves accountable for the quality of our products, our sales tactics, our commitment to customers and the environment, we can bring this great industry back to the esteemed position it deserves."

Scott Burgess is the best auto critic for The Detroit News. He can be reached at (313) 223-3217 or sburgess@detnews.com">sburgess@detnews.com.