The 2012 Hyundai Santro Xing sold in India. Photo courtesy of Hyundai.

Can Hyundai lose market share by focusing on quality?

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Hyundai has become the world’s fifth largest automaker by focusing on producing stylish and value-laden vehicles at an attractive price point.

In fact, in the rapidly emerging automotive market of India they have risen to number 2, second only to Maruti Suzuki.

In the US, Hyundai sold 645,691 vehicles during 2011, more than doubling their market share between 2001 and 2009. In 2011, they sold 5.1 percent of all vehicles in the US – far behind the world leaders but steadily rising in the ranks.

Nevertheless, even as global demand for its vehicles grows, the automaker is scaling back production for fear of losing the growing reputation of their products, according to a REUTERS post earlier today.

The decision means they have to keep the output of their Chennai plant for domestic demand, instead of producing models for other high growth markets. The Reuters article implies it may be causing internal strife among the upper management of the company, some of whom believe it a mistake to curtail production just when they are so much in demand.

"Our operations all over the world are calling for more cars. Executives tell the chairman that capacity should be expanded because they have to sell more cars," a senior Hyundai executive in Seoul reportedly told Reuters.

The chairman replied, “What are you talking about? We have enough capacity. What we need now is stability," according to the executive, who spoke with Reuters on the specific condition of not being identified.

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