Hyundai backed its bad reputation with the longest warranty in the industry

The 1997 Asian financial crisis hit Hyundai hard enough that the company laid off about 25% of its staff, and its cars ranked among the worst for initial defects in J.D. Power's quality survey around 1998, according to a TIME retrospective on the period. Hyundai had entered the US market in 1986 with the Excel, a car widely known for needing frequent part replacements, and by the late 1990s that reputation for poor build quality was still following the brand.

In September 1998, Hyundai announced what it called the best warranty in the industry for its 1999 model-year cars: a 5-year/60,000-mile bumper-to-bumper warranty plus a 10-year/100,000-mile powertrain warranty and five years of unlimited-mileage roadside assistance, according to its own press materials. It was a public bet that Hyundai could fix its quality fast enough to avoid the warranty claims bankrupting the promise — chairman Chung Mong-koo was quoted saying 'Quality is crucial to our survival. We have to get it right no matter what the cost.'

The quality investment behind the warranty converted into measurable results within a few years. Hyundai rose to second place, tied with Honda and trailing only Toyota, in J.D. Power's 2004 survey of initial car quality, according to TIME's coverage of the turnaround.

Hyundai offered a 10-year warranty before quality caught up, staking money on improvement and forcing urgency, rising to second in J.D. Power's 2004 study.

A 10-year warranty publicly staked Hyundai's own money on quality actually improving, giving skeptical buyers a concrete guarantee instead of asking them to simply trust a promise of change.

Making the commitment before quality had caught up forced urgency, since a warranty running ahead of real reliability would have been ruinously expensive to honor.

Targeting the exact metric buyers used to judge cars, J.D. Power's rankings, gave Hyundai's engineers a specific external benchmark to chase rather than an internal standard no customer could see.

When quality reputation is the barrier to sales, guaranteeing more than competitors dare to before you've earned it can force the organization to close the gap fast enough to make it real.

Hyundai rose to second place in J.D. Power's 2004 initial quality survey, tied with Honda and behind only Toyota, after ranking among the worst brands in the same survey around 1998, according to TIME's account of the turnaround. The 10-year/100,000-mile powertrain warranty remained a standard part of Hyundai's US sales pitch for decades afterward, and Hyundai's quality recovery became a widely cited case of a warranty used as a forcing function for an internal engineering turnaround rather than simply a marketing device.