Chapter 199: The First Prototype: A Glimpse into the Future of HW Automobile

In 2002, the year the Euro officially launched in the European Union, my first move was to establish the HW Automobile Research Institute by merging the research centers of Ajin Automobile and Soonyang Automobile.

To see the prototype of our first car—a project driven by my vision—Chairman Song Hyun-chang, President Jo Dae-ho of the automobile division, CEO Oh Se-hyun, and I paid an early morning visit.

In the institute’s showroom, the head of the design center, designers, and researchers waited for us with tense expressions.

Not only people but also a compact car boasting a gleaming finish awaited our arrival.

M21-1

It even sported a name tag with the project name, signifying the first mini car of the 21st century.

The moment I saw the new car, I mentally scored it an 85 out of 100.

Perhaps the number showed on my face, as the design center head and the chief researcher immediately stuck by the executives’ sides and began their explanation.

“We opted for an overall rounded design. Being a compact car, this choice provides a sense of stability. However, the silhouette and character lines rise aggressively towards the rear, creating tension and a dynamic form.”

“By choosing a low-slung posture, we also aimed for the pure joy of driving, as if the car is glued to the road.”

“We anticipate that the unexpected thrill of driving such a small, cute car will create a significant enjoyment stemming from that contrast.”

I started examining the car, only half-listening to their explanations.

796cc engine, 4-speed automatic, 2-seater coupe.

A design that makes you fall in love at first sight—that was all I had asked for.

However, the car before me now, while not exactly love at first sight material, was certainly cute and pretty enough to warrant such praise.

The development team finished their explanations as I meticulously checked the interior, and the others began to examine the car as well.

“Is a convertible version absolutely out of the question?”

When I quietly asked the chief researcher, his expression turned troubled.

“To meet European safety standards, we couldn’t avoid the pressure on manufacturing costs. Profitability was impossible, so we excluded it from the design phase.”

I had repeatedly urged them to create a stunning new car without worrying about profitability, but it seemed the pressure regarding performance, ingrained in their bones, was unavoidable. Disappointment led to a soft sigh.

Once everyone had inspected the car, the development team looked even more nervous.

Now it was the company executives’ turn to give their evaluations. If even a slightly negative comment came from their lips, a nightmare beyond their previous hardships awaited them.

The timeline was set for an autumn release. If the project were scrapped today, the development team would face a truly grueling schedule.

All eyes were on Chairman Song Hyun-chang. After all, he was a living testament to the automobile industry, having brought Ajin Automobile to second place domestically.

Moreover, he was a man who poured his heart and soul into developing innovative cars. He was a forward-thinker who had even launched a two-seater convertible sports car for the first time in Korea, even if it was just assembly. He did take a huge financial hit for it though.

He slowly opened his mouth.

“Well done. You’ve all worked hard.”

Chairman Song Hyun-chang patted the shoulders of the development team, their tension visibly easing, and acknowledged their efforts.

“You’ve all done well. Everyone on the development team can go home now and see your families. Who knows what kind of hardship awaits us starting tomorrow.”

President Jo Dae-ho refrained from giving a direct evaluation, but he too seemed to acknowledge their hard work.

“Now, shall we have some tea and discuss things?”

President Jo led us, including Chairman Song, out of the showroom.

In the reception room within the research institute, everyone remained quiet, teacups before them.

Especially Chairman Song Hyun-chang, who sipped his tea in silence, prompting a hurried inquiry from President Jo.

“Chairman, I’d like to hear your honest opinion….”

“Huh? What I said earlier was sincere, you know?”

He replied casually, but President Jo couldn’t shake off his doubtful expression.

“Is that so?”

“How many compact cars do we have in Korea? Isn’t this quite excellent for what it is?”

“The fact that it’s a two-seater might be a weakness….”

“Where is there a car without weaknesses? Besides, four-person families tend to avoid compact cars, right? They prioritize their children’s safety. Compact cars are secondary vehicles, and those are often for two people anyway.”

Chairman Song seemed genuinely pleased. Then, he surprised us all with an unexpected remark.

“Don’t even consider my opinion anymore. Aren’t I a setting sun nearing the horizon? I’m an old man who should have packed up and left his position long ago.”

“No, you’re still….”

Chairman Song waved his hand, cutting off President Jo’s words.

“I’ve been holding onto my position only because I still have enough clout to be a figurehead at business gatherings. But with Chairman Joo of Daehyun passing away and Chairman Jin of Soonyang stepping back, it’s undeniable that my role is over.”

Chairman Song Hyun-chang suddenly drained his teacup and abruptly stood up.

“Ignore my opinion and sort out your own thoughts. I’ll head up first.”

“Ch, Chairman.”

We were all taken aback by Chairman Song’s sudden actions.

“It’s alright. Sit and continue your discussion. An old man knows when to step aside to be treated with respect. And I want to be respected by you all. Heh heh.”

Chairman Song Hyun-chang strode away, not even looking back as he left the research institute.

We were all surprised by his sudden declaration, but we couldn’t just stand there blankly. Those who remained had work to do.

“Well, shall we share our honest opinions now?”

President Jo first looked at Oh Se-hyun. Receiving his gaze, Oh Se-hyun simply shrugged.

“What do I know? I’m just an average middle-aged man who thinks a good car is big, spacious, and has a trunk that can fit golf bags comfortably. President Jo, you’re the expert on evaluating compact cars; your opinion is the most important.”

Instead of Oh Se-hyun taking the bait, he asked for my opinion.

“Do-jun, what do you think?”

“It’s exactly the car I wanted. While not 100% satisfactory, I think it’s sufficient.”

“Well-designed, reasonably safe, and affordable?”

“Yes. A car that middle-class parents can buy for their college graduate children. A car that young professionals can afford to maintain with a three-year installment plan. A car that looks somewhat stylish when you drive it, not cheap. That’s what I think. And this new car somewhat aligns with my thoughts.”

I offered my opinion based on what an average person would consider.

“How many people buy a car based on its performance? Horsepower, power, zero-to-sixty, balance… Most people just use their cars for commuting and weekend outings, right?”

“If you just look at the car, you’re right. I don’t disagree with your assessment.”

“But you have some other thoughts?”

“Yes. According to the information, Daihatsu in Japan is releasing a 600cc compact car. A two-seater convertible.”

Daihatsu Copen? Is that coming out this year?

“Even if we only consider the domestic market, we have to compete with cars like that overseas. It’s embarrassing, but Korean cars are still bought for their cheap price. But this new car we just saw has significantly lower price competitiveness. We can’t just think about the domestic compact car market and start mass production, can we?”

“What if we set the overall profit margin for HW Automobile to zero? Would it still lack competitiveness?”

“What?”

“M21-1, right? That’s the project name?”

“Yes.”

“So, we can sell the M21-1 at a loss. Other models will generate profit. In other words, even if we focus solely on increasing production volume without aiming for profit, would it still lack price competitiveness?”

President Jo Dae-ho paused for a moment, lost in thought.

“You’re suggesting we only consider the profit from increased production scale?”

“Yes. Uncle, as a major shareholder, would you accept that? Managing a company without profit?”

I subtly signaled to Oh Se-hyun. He quickly chimed in.

“I don’t mind. But keep in mind that the stock price will continue to fall if there’s no profit.”

“It’s a mid-to-long-term strategy. After all, we’re not the ones who need to prop up the automobile stock price, are we?”

Even though Oh Se-hyun’s and my opinions aligned, President Jo Dae-ho’s expression remained unfavorable.

The stock price is an indicator of a company’s performance. A falling stock price is seen as poor management, and the primary responsibility naturally falls on the CEO.

Even if the major shareholders, the owners of the company, say it’s okay, shareholders’ minds can quickly change when they see the stock price plummeting.

“President Jo.”

“Huh? Oh….”

I needed to clearly convey my goal to him, who was lost in thought. What did it matter if it took ten or twenty years to build a proper automobile company, step by step?

“What’s the gap between us and Daehyun Automobile?”

“Based on the number of units shipped, it’s 65%, but in terms of sales, we don’t even reach half of Daehyun’s. 49%….”

This starkly shows the absence of high-profit margin luxury cars. If we were going in the right direction, we should be focusing on producing luxurious mid-size sedans rather than pretty compact cars.

However, as I’ve already admitted, our position in the global market is that of a cheap car manufacturer. If we shift our focus to mid-size sedans, it’s uncertain whether we can even compete with Daehyun, let alone the global market.

“Even if we forgo profit and focus solely on narrowing the gap, is this new car still not price-competitive?”

“Are you serious?”

“Yes.”

Oh Se-hyun spoke to President Jo Dae-ho, who was looking at me with an uneasy expression, reconfirming my intentions.

“President Jo, let’s do it. What if we don’t make money from cars? This guy will bring money from Soonyang Financial Group and give it to us. Let’s aim for a level where we can pay the employees’ salaries, invest in research and development, and expand the production line. Wouldn’t that mean we might even surpass Daehyun?”

As expected, my uncle is quick-witted. Once the goal is clearly set, he doesn’t worry about unnecessary things.

The major shareholder declared that they would prioritize size over profit. This was tantamount to saying that even if the stock price plummeted, there would be no change in management as long as we progressed step by step towards the goal.

“Even if we don’t receive as good of an evaluation as that Daihatsu compact car coming out this year, can we at least be the next best alternative?”

“No.”

President Jo shook his head immediately, without even a moment’s hesitation.

“The technological gap with Daehyun is already significant. Let alone Japan? It’s impossible. We’ll probably be the last choice. I’m sorry, but that’s our position.”

His harsh self-assessment stung. I adjusted my question to reflect reality.

“Then, how about in the Korean compact car market?”

“More than 50% market share in the compact car market. This is what I need to achieve. Leave it to me. I’ll achieve it by next year. If I can’t do this while selling at cost, I deserve to be dismissed as CEO. I’ll bet my position on it.”

He showed great confidence this time. Seeing him like this makes him seem reliable.

“Then please expedite the process with a target launch in October and a new car announcement in June.”

“June? Why June of all months? The Frankfurt Motor Show is in May, and Paris is in October. I was thinking of the Paris Motor Show.”

“As you mentioned, isn’t focusing on the domestic market our priority? The World Cup is in June. It’s the perfect opportunity.”

President Jo, and even Oh Se-hyun, frowned at the mention of the World Cup.

“Hey! Even if it’s held in our country, it’s still someone else’s party. The preliminary tournament is the end of the road for us, so why the World Cup?”

Oh Se-hyun’s face was contorted in a frown.

“I have a feeling this time will be different. Don’t we have the home-ground advantage? If we perform well, it’ll be a festive atmosphere, and riding that wave will be incredibly effective.”

This is….

Since no one would believe me, there’s no way to explain it.