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Watch Out for Kia

Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
KIA is looking more and more like the next brand to go belly-up in the American market.

With very stiff competition from sister Hyundai, and with GM and Chrysler dealers folding (thus ending multi-brand outlets), KIA will probably not be able to sell enough cars to stay in business here.

What ails this brand? Is the entry level market just too cheap for most buyers these days?

What could KIA change before it's too late?

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Comments

  • boltguyboltguy Posts: 94
    Are you possibly making up your own news story? Everything I've seen shows they're growing and more successful than any time in their history.

    http://www.kia-world.net/index.php/2010/07/07/2010-kia-car-sales-surpass-1-milli- on-units/

    “I am encouraged to see sales of Kia vehicles around the world surpass the 1 million unit sales mark faster than ever before in the automaker’s history. All of major regions are now gearing up for the sales of all-new Sportage crossover, which will certainly add to our momentum and help continue strong sales for the brand in the second half of 2010,” said Hyoung-Keun Lee, President of Kia Motors.
  • fintailfintail Posts: 34,333
    I hope not. IMO Kia has some of the better styling of the HyunKia group, and I don't know if it is really suffering right now - I see an adequate amount Souls and Fortes around. If anything, if the group gets ambitious, maybe Kia will become lowline to lower middle and H will be everything above.
  • The Wall St. Journal included KIA among brands that would disappear by the end of 2011.

    http://247wallst.com/2010/06/15/247-wall-st-ten-brands-that-will-disappear-in-20- 11/

    Their argument was that Hyundai could not afford multiple brands and would shed KIA like GM did Pontiac and Saturn. It was an unconvincing article for me - GM sales were plummeting while Hyundai/KIA sales are increasing; KIA keeps coming out with new models while the multiple GM brands were stagnant. Most of the brands that they said would disappear were in dire financial trouble, but KIA is not, as far as I can tell. As I said, it was a rather weak argument, but it may be the source of some rumors.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    edited July 2010
    Maybe not so good in the U.S., which was the subject of my post---that they might go belly up in the US market. I wasn't referring to the world market. Kia sells cars at very little profit after all, in the USA market, and the parent company Hyundai might get tired of competing with itself, given the small market shares here.

    Sales percentages don't tell the whole story.

    Consider that BMW has the same market share as KIA and sells each unit at a considerably higher profit. It's hard to make money selling $11,000 cars is what I mean.

    Seems like KIA goes boom and bust within its own products---it has one hit, and right next to it, a real bomb.

    I'm just not sure KIA has the product mix, reputation, price point, dealer network, marketing, etc, to convince Hyundai to keep going.

    A lot depends on the economy I think. One or two more years of recession and I see Hyundai throwing in the towel in the US with KIA.

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  • boaz47boaz47 Posts: 2,750
    I believe Hyundai would almost be forced to keep the Kia name going in other markets if what we read about the Korean position when Kia went bankrupt and Hyundai was almost forced to buy them is correct. But looking at the market sales I would think Suzuki would be the one on the chopping block. It also looks like the Smart car has continued its failing ways in the US market pretty much like it did over seas.

    While I am not a big Kia fan it has a better looking outlook than Suzuki in sales I think.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    Oh yeah well Suzuki is a foregone conclusion, and Smart hasn't *ever* made money.

    Tesla is another one circling the drain.

    But it's interesting to speculate on the "bigger fish" and how and why *they* fail. I think some people were surprised that Pontiac tanked so fast, since you see Pontiacs everywhere---but in terms of making sense in the market, the car didn't anymore.

    I just don't think KIA makes sense anymore in the US market, for the parent company I mean.

    Kia is like Radio Shack to Hyundai's Best Buy.

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  • iluvmysephia1iluvmysephia1 Posts: 5,713
    and I believe it was their Japanese automotive CEO speaking, Mitsubishi has no intentions of pulling out of the American sales market. With the new all-electric i-MiEV coming out soon I would not expect Mitsubishi to pull up stakes. The Outlander SUV and Lancer compact are still selling the best and I drive a 2008 Lancer GTS and love it, but to someone looking at their sales performance of the past several years I would be strongly suspecting their departure, too.

    Don't think that's gonna be happenin', though.

    2011 Kia Soul Sport 5-speed

  • nippononlynippononly SF Bay AreaPosts: 12,695
    is like the #1 supplier of rental cars in the U.S. now, although with GM's ENORMOUS resurgence in the no-profit fleet sales world last month, Kia might have a little competition there once again.

    Seems like Hyundai would be smart to keep Kia here, sopping up the fleet sales, to protect and improve the value of the Hyundai brand, especially with the new push into luxury cars for Hyundai.

    I dunno...my local Toyota dealer just bought a Kia franchise about 3 months ago and so far hasn't been able to move any of the cars in the initial shipment off the lot. I think some of the Kia models have potential, but just like Mitsubishi and Suzuki, two other companies that will definitely be gone from American shores in the next few years (while continuing to thrive in Japan, I have no doubt), even the company's brand new models have nothing at all to make them stand out from the crowd. The ONLY unique thing they have at Kia is the Soul, and even that has competition from the Cube, neither of which seems to sell well at all despite their curiosity value. And neither gets more than mediocre reviews as a driver's car, although they certainly are eccentric and different styling-wise.

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  • smarty666smarty666 Posts: 1,503
    Yeah, my local Toyota/Scion stealer bought a Kia francise too and I have seen the same thing week after week with Kia, the same vehicles just sitting there. Seem to have big difficulties getting the cars off the lot.

    Not sure what is going to happen to Kia but I can tell you sopping up fleet sales is not going to protect and improve the value of the Hyundai brand. At least, they don't have as high fleet sales as GM, Ford, and Chrysler do.
  • Read and weep on the great deal you are getting...Hyundai is the parent company, so it looks like another shave, GM style..

    Funny name and its parent company name is funnier...

    Maybe N. Korea is going to eliminate the brand..We live in a strange world..
  • benjaminhbenjaminh Posts: 1,786
    motorcity: Any chance you could give us a link to the article you're talking about?

    The review of the new Optima on this site says it's a pretty darn good car...
  • steverstever Viva Las CrucesPosts: 41,966
    edited November 2010
    A link would be nice, unless perhaps you are referring to the WSJ article recently posted?.

    Here's a recent link that doesn't sound like they are going under. Written before the latest unpleasantness though. Kia adding another 1,000 jobs in west Georgia ( Atlanta Business Journal)

    Another story about booming sales in the US:

    "Kia's U.S. sales gained 15 percent this year through October, outpacing General Motors, Toyota and Honda.

    South Korea's second-largest carmaker is defying a drop in quality rankings by J.D. Power & Associates as 9.6 percent unemployment spurs demand for inexpensive cars."

    Kia turns to hamsters to boost sales (Pittsburg Post-Gazette).

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    edited November 2010
    Perhaps we should contrast that good news with the drop in quality ratings and the steep depreciation for an "overall" picture of Kia's future?

    Or maybe, if the price is right, and enough content is packed into the car, consumers won't care about those deficiencies?

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  • benjaminhbenjaminh Posts: 1,786
    "latest unpleasantness"? I must have missed something. What was that?

    Seems like their factories are running close to full tilt?

    Depreciation is huge with KIA, I'm sure. And some of their lower end cars aren't that great. But isn't the Optima fairly impressive considering where they were a few years ago? I myself don't like the styling that much, in part for functional reasons. The high belt line and thick rear pillar means there's a nasty blind spot there. I'm glad I can see out the back of my 08 Accord....
  • steverstever Viva Las CrucesPosts: 41,966
    edited November 2010
    The "latest unpleasantness" aside referred to the bombing by North Korea and escalating Korean tensions. Factory production in Korea could be shunted to war production. Who knows if that would impact the new US plant down in Georgia.

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    I think these days in the auto industry it's not so much about how much your particular product is improving from past models, but how fast it is improving in relation to competing models.

    For a somewhat minor example of this, consider the number of times Cadillac tried to compete with Mercedes in the high-end roadster market, only to find out that their "new" car was only equivalent to Benz's old one.

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  • benjaminhbenjaminh Posts: 1,786
    oh, that unpleasantness. Don't think it'll get that bad, but maybe I'm fooling myself.

    shifty: seems like the Optima may possibly be close to competing with the Altima, or something like that, I'm not sure...Haven't driven either one, so I can't really say.

    With a huge factory in the US I'd say they are unlikely to die. But it's true the brand has almost zero cache at this point. I mean being below Hyundai is tough.

    Hyundai has come up a lot though--and many of their cars are pretty similar. The Optima looks different from the Sonata, but the engine, transmission, chassis and other innards are pretty much the same, aren't they.

    I got a view of how much Hyundai has come up in the world on a recent visit to Nashville. We were in a neighborhood where the houses were probably about 400-800k. One house had loaded his and hers Sonatas. Doubt they would have considered the previous generation of that car. Just guessing, but the people looked like former Caddy owners or something else American and luxe...

    Now people like that probably wouldn't consider a Kia, but maybe in 5 years they would? Guess that's a stretch....
  • benjaminhbenjaminh Posts: 1,786
    Didn't KIA hire away a stylist from Audi? I think the newer KIAs look kind of good these days, in a somewhat tortured way. Minimalist Audi meets Baroque on a budget, or something...
  • steverstever Viva Las CrucesPosts: 41,966
    edited November 2010
    I mean being below Hyundai is tough

    Could be even tougher considering that Kia is mostly owned by Hyundai (40%, down from 51% back in Kia's bankruptcy days in 1997). I don't think Hyundai really wanted Kia but from stories I've read, the Korean government pretty much told them to outbid Ford for Kia.

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    Seems to me unless Hyundai can push upscale (which they have tried but not with great success yet), and keep KIA in the cheap seats, then all they'll end up doing is financing KIA to do conquest sales against themselves.

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  • benjaminhbenjaminh Posts: 1,786
    edited November 2010
    I'm sure you know more about these things than I do, but in my probably very fuzzy-headed way I guess I thought Hyundai was successfully moving upmarket. I mean the Genesis and Equus have gotten fairly good reviews, right? I know sales are still small at this point, but it seems like a few people who want some taste of what Lexus would be like without paying full price are trying the attempted upscale Hyundais? But am I wrong on that?

    And the Sonata has moved more than a little, I think, from near the bottom of the mid-size pack to near the top. And Sonata's sales have zoomed up. Sales are up more than 60% so far this year, and as H seems to be selling c. 17,000 or so a month they'll get to about 200k by the end of the year. And now that they've added the turbo and the hybrid, in upcoming calendar 2011 they might get near 250,000 sales for the Sonata--which is pretty close to how many Accords are sold by Honda. That's pretty stunning to me.

    And the Sonata has even been added to Car and Driver's top ten list of cars. That's somewhat impressive, isn't it.

    And I could be wrong, but I don't think KIA is losing money, is it? Their sales are up and it seems like they are at least breaking even. So I'm not sure that KIA is draining the life blood of Hyundai. True KIA may not be helping them a lot on the bottom line, but I don't think they're bloodsuckers.

    Since the Optima is really a classic badge engineered near-twin of the Sonata, however, it does seem like KIA is, as you say, probably stealing sales from Hyundai.

    The Sonata is such a hit that I actually wonder whether that factory in Alabama that builds them is going to be allowed to make many of these Optimas. I mean when it comes right down to it if it turns out that every Optima built is a Sonata that's not built and therefore not sold....Maybe Hyundai as the bigger and more successful of the joined companies will just say. OK, we'll make 40,000 Optimas for you a year in Alabama, but that's it....???

    (And man, do I not want to grade student papers tonight to have spent this much time on cars I don't even own.....!)
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    Well the heading/subject for this topic has a ???? in it, so no, I don't claim to know any more than you do about it. KIA seems to be doing well -- I'm just not sure why--that is, I'm not sure if it's the genuine "hand of the market" or if KIA is a false positive right now.

    I think Hyundai can only go upmarket so far with their nameplate and then hit a ceiling, and I think they have definitely hit it.

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  • nippononlynippononly SF Bay AreaPosts: 12,695
    edited March 2011
    Or maybe, if the price is right, and enough content is packed into the car, consumers won't care about those deficiencies?

    Bingo. You put your finger right on the crux of the matter there, and perhaps one one of the keys to Kia's continued success? Although having a variety of wild-looking product that is different from the usual schlock being pushed by the Big 6 certainly helps too.

    People are saying they like what they see of the early looks at the new Rio. Imagine if they bring the European diesel Rio (1.2?) to America - that would be a game changer - a $15K (slow) car that makes 50-60 mpg. I still love the looks of the car with the hamsters in the commercial (Soul?), but the mileage sucks so I wouldn't consider buying one.

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  • lemkolemko Posts: 15,207
    edited March 2011
    ...and will only do better due to an ongoing depression, (let's just call it what it is) and ever escalating fuel prices. It's the perfect storm in favor of a low-cost fuel-efficient make.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    KIA is doing better than I ever expected, but I do wonder about the low resale value. This is not a good thing for future buyers.

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  • steverstever Viva Las CrucesPosts: 41,966
    This may slow the seeming Juggernaut down a bit:

    "Hyundai Motor Co. said Sunday that labor strife at engine-parts maker Yoosung Enterprise Co. is disrupting automobile production for it and affiliate Kia Motors Corp., and warned a prolonged production halt at Yoosung could deal a major blow for several South Korean car makers"

    Labor Strife Disrupts Hyundai, Kia Production (WSJ)

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  • steverstever Viva Las CrucesPosts: 41,966
    Not much of a "Death watch for Kia" when they're investing another big hunk of change in Georgia.

    Kia Spends $100 Million To Boost U.S. Production (AutoObserver)

    image

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  • fezofezo Posts: 9,444
    And they are opening a dealership here in town. Right where the Chevy dealership died.
  • fintailfintail Posts: 34,333
    Yeah, I think the death watch is over. When there's a Kia that I would seriously consider if I was shopping in the car's given class, that says something :shades:
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,989
    Well no "death watch", but it is a company that trades in price and style over technology and quality, so we'll have to see if that strategy works or not. Kia obviously wants the entry-level market on a number of starting levels.

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