The Automaker with a Problem Most Businesses Would Envy

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A customer is helped by a car salesman at a Hyundai dealership on April 3, 2012 in Plantation, Fla.

Not long ago, Hyundai had a less-than-stellar reputation for quality and had to resort to gimmicks to sell cars. During the Great Recession, the South Korean automaker’s fleet included the cheapest car sold in the U.S., and it still needed promotions such as $1.49-per-gallon gas for a year and a guaranteed buy-back program for customers who get laid off to attract buyers. Fast forward to today, though, and Hyundai gets high scores from drivers and car critics alike for quality, performance, value, and overall respect. So what’s the company’s big problem? It’s struggling to make cars fast enough to meet the demands of the marketplace.

A USA Today post recently reported that Hyundai was trying to figure out how to build an extra 100,000 cars this year because of the torrid pace at which drivers were scooping up the cars at dealerships. Hyundai sold nearly 70,000 cars in March, leaving dealerships with just 55,000 by the end of the month. That’s only a 25-day supply of cars, when the industry average is for dealerships to be in possession of enough cars to last 55 days of sales.

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The Hyundai Elantra sedan recently topped a list of the hardest cars to find at dealers: The typical Elantra lasts just three days before someone buys it. Another in-demand car, Toyota’s Prius C, which sold over 1,200 units in its first three days on the market, lasts on average about six days at a dealership before being purchased.

John Krafcik, Hyundai’s North American CEO, told USA Today, “We are literally selling cars off the transporters.”

What’s brought about Hyundai’s amazingly successful run? For the most part, the answer is nothing more complicated than that Hyundai has put its focus squarely on quality and value, without getting too fancy or complex. While other automakers spent much time and energy building hybrids and electric-powered cars, Hyundai kept at the proven formula of traditional gas-powered vehicles with good fuel efficiency. It hasn’t ignored alternative-energy cars entirely, but seemed to wait until technology and market conditions were optimal before going there. Hyundai is tip-toeing into this field as well: It now has just one hybrid car, the Sonata Hybrid, which seems wise considering that, for now at least, the appeal of hybrids and electric cars is limited.

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Hyundai has also focused, simply enough, on making a quality product. Like many Hyundais, the Accent gets terrific overall ratings from Consumer Reports. TrueCar’s Performance ScoreCard has given the Hyundai brand top grades for the past two years, and Hyundais are perennial contenders for various “Best Cars for the Money” crowns.

Looking back, Krafcik recently told the Associated Press, Hyundai’s decision to stand behind its product with a 10-year, 100,000-mile powertrain warranty was a gamer changer:

It was an absolute bet-the-company move. If we had gotten that one wrong, then the company would have failed. And rather quickly, too, as the warranty expense and exposure are significant when you’re taking a bath that big.

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Hyundai also focused on the little things that meant a lot to customers, like cup holders, according to Krafcik:

This is a great success for Hyundai, and it took some time to convince the engineers that this is what we needed to do (because) cup holders cost money. If you’re going to do them right, they have little gripper fingers and you have to make more expensive molds and stuff. Engineers never understand why a driver would need two cup holders and the front seat passenger would also need two cup holders.

Cup holders, huh? Probably not as important as gas mileage, but as any driver who has dumped coffee on himself knows, a good cup holder is indeed important.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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