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Hyundai: from borrowing engines from Mitsubishi to providing them for Mercedes-Benz

Yesterday, after driving the new rear-wheel-drive Genesis sedan at Hyundai's state-of-the-art research facility and test tracks in Namyang, Korea, we had lunch with Dr. Hyun-Soon Lee, who is President of the R&D and Corporate Product Planning and Strategy Divisions of Hyundai-Kia Motors. Dr. Lee joined Hyundai in 1984, so he has been at the company since before it sold cars in the United States (the Hyundai Excel, that gem of a subcompact, debuted here in 1986).

Dr. Lee reminded us what a big achievement the Genesis is for this automaker, which was established only four decades ago as a satellite assembly company for Ford's U.K. arm to assemble Ford Cortinas for the Korean market. Aside from those kit cars, Hyundai's first car was the 1975 Pony (which, incidentally, was designed by Giugiaro), and through the 1980s Hyundai licensed designs from Mitsubishi to build cars. Hyundai did not build its own engine until 1991, when the Alpha four-cylinder was introduced. Dr. Lee was the proud father of that engine, which is still used in the Accent.

From its first engine seventeen years ago, the company is now building a variety of four- and six-cylinder passenger-car engines and now also a completely modern V-8, the Tau, which is optional in the new Genesis luxury sedan. "It all started in 1990," recalls Dr. Lee, "when Toyota launched Lexus. We were just spectators, but we thought, 'Why couldn't we do that, also?' At the time, our daydream seemed laughable, but through diligence and hard work, our dream has come true. Until 1991, when we developed our first engine, we had no technology; we relied totally on Mitsubishi. The Alpha gave us a tremendous boost of confidence, and we now can build anything we want. We could build a 600-horsepower supercar, or we could build a $2000 people's car. But the car we have always wanted to build is the one you drove today [the Genesis]."

While presiding over a sumptuous lunch at Rolling Hills, Hyundai's luxurious modern hotel near its Namyang facilities, the softspoken Dr. Lee elaborated on Hyundai's technological accomplishments and growth. The tables have turned on its relationship with Mitsubishi, as Hyundai now supplies technology for the 2.0-liter and 2.4-liter Theta engines for both Mitsubishi and Chrysler. Some 1.9 million of them were built in 2007. And at this year's Beijing auto show, Lee recalled, "Dr. Dieter Zetsche [head of Mercedes-Benz] announced that he would like to partner with Hyundai for four-cylinder engines."

After reflecting on this fact for a moment, Dr. Lee said, "I am not sure we want to share our technology."

The irony at the table was richer than the cream of mushroom soup. Here was the man who developed a simple, four-cylinder engine to relieve his company of its reliance on one of Japan's second-tier automakers, now able to entertain offers from the world's most prestigious automaker for an engine-sharing deal. How quickly things change in the automotive world. And how quickly one realizes that Hyundai is a force to be reckoned with.