Raising A Lemon.(Korean car manufacturers struggle to regain popularity)(Brief Article)(Statistical Data Included)

It was out of embarrassment that Hyundai decided to launch "Operation Dave or Bust." The year was 1998 and the South Korean carmaker was in big trouble. Its U.S. sales had fallen 65 percent from their peak 10 years earlier, and Hyundais had become a favorite target of America's popular late-night TV comedians. Jay Leno equated the Hyundai with the Olympic luge, "a three-foot-long vehicle that has to be pushed to get started and only goes downhill." But when David Letterman compared Hyundai to Russia's breakdown-prone Mir space station, a young Hyundai salesman from Montana decided he'd taken enough. He headed for New York in a Hyundai Tiburon Coupe, planning to challenge Letterman to a test drive. Hyundai assigned a PR team to Operation Dave, and cheering staffers greeted the hero at dealerships across the United States. "It was time to fight back," says Hyundai spokesman Mike Anson. Unfortunately, Operation Dave crashed without impact. Letterman ignored it.

For Hyundai and Korea's other surviving carmakers, Daewoo and Kia, winning a bigger share of the largest of all car markets is only part of the challenge. They also want to prove that their cars and their country are world-class--above all as good as anything in Japan, the hated rival that once ruled Korea. There was joy in Seoul when Hyundai entered the United States in the mid-'80s and broke the 28-year-old sales records for a new import. But soon its cars began to fall apart, leaving a reputation for shoddiness rivaled only by Yugoslavia's ill- fated Yugo. Now it's crunch time: all three Korean carmakers are facing troubles at home (Daewoo is close to bankruptcy, while Hyundai Motors and Kia are carrying heavy debt). Yet all are charging ahead with a risky American offensive, offering huge discounts and sweeping guarantees to gain market share.

On its face, the campaign appears to be paying off. Korean car sales in the United States have risen 170 percent in the past two years. But some industry experts are skeptical of reported profits, pointing to the notoriously tangled accounting procedures of Korean conglomerates and hidden long-term costs. And analysts are projecting a decline in U.S. auto sales for 2001. Even Hyundai, despite sterling reviews for its 2001 Elantra compact, is still in an uphill battle for respect. As the hosts of the popular "Car Talk" radio show put it, many still view Hyundai "as a car that flies around the corner with a Domino's pizza bucket on the antenna."

For a time, Korean cars were no joke. Back in the early 1980s U.S. automakers were getting pounded by an invasion of better, cheaper Japanese imports like the Honda Civic. Hoping to copy those Japanese victories, Hyundai and Daewoo would each invest close to $1 billion to prepare their own invasion. Hyundai struck first, introducing the $4,995 Hyundai Excel in 1986, and within two years it was the fifth- best-selling model in the U.S. market. The honeymoon lasted about as long as the cars. "When Hyundai came to the United States there was no brand definition so the public implied Japanese quality," says Finbarr O'Neill, president and CEO of Hyundai Motor America. "It became apparent the company was not up to ...