Watch Out for Kia
Mr_Shiftright
Member Posts: 64,481
in Kia
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?
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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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.
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.
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.
While I am not a big Kia fan it has a better looking outlook than Suzuki in sales I think.
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.
Don't think that's gonna be happenin', though.
2021 Kia Soul LX 6-speed stick
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.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
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.
Funny name and its parent company name is funnier...
Maybe N. Korea is going to eliminate the brand..We live in a strange world..
The review of the new Optima on this site says it's a pretty darn good car...
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).
Or maybe, if the price is right, and enough content is packed into the car, consumers won't care about those deficiencies?
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....
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.
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....
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.
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.....!)
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.
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.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
"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)
Kia Spends $100 Million To Boost U.S. Production (AutoObserver)
That I really do like and would find a test drive to be cool.
2021 Kia Soul LX 6-speed stick
You remember the old joke about one merchant asking another how he could sell his products at a loss?
"I make it up in volume!"
The margins are lower for sure. I doubt Kia has to worry though, Koreans are very proud of their industry and their feds will step in again if the ship takes on any water.
Well, pot, meet kettle. The US gov'mint certainly seems to have kept GM and Chrysler out of the grave these last few years, and successfully so---
We're not doomed but we're always ready to make a bailout...I...I mean a bankruptcy...ooops...I...I mean another ride in the NYC Cashcab or the CHI Cashcab...a reality.
Now that America's problems are all solved I'm gonna go witness another Seattle Mariner's victory on the tube. I've got more important ventures to pursue.
2021 Kia Soul LX 6-speed stick
Fact is, bailouts of the car companies seems to have worked, at least for now.
I doubt most car companies in the world would still exist were it not for some form of government assistance, either financial or regulatory or protective.
But this deal I say was on C-SPAN. All these kids now are watching our big, bloated Guv-Mint like a hawk so they can expose it's weaknesses. And they'll find them, our Guv-Mint is arrogant and won't care what these kids find out. Besides, unless they form an uprising, what's gonna become of this information, anyway? Ignorance is bliss, right?
No, this lady was in some kind of a Timothy Geitner-type position, the newsperson formed a question about a big chunk of money being spent on something that lacked contact-ability, and this woman had no idea what he was talking about. I think the huge chunk of money was missing, that was it. And she didn't know where it had gone!
But for sure the money was missing, though. Not all that hard for me to imagine such a thing with big Guv-Mint, actually.
2021 Kia Soul LX 6-speed stick
Unbelievable. She certainly is still counting on those raspberry jelly donuts and Starbuck's coffee delivered hot and on the spot, though. Pathetic.
2021 Kia Soul LX 6-speed stick
"The sales pace for Hyundai and Kia vehicles has been torrid. Hyundai set a new May record of nearly 60,000 vehicles sold for a 21 percent hike over the same record-breaking period in 2010. Kia not only had its best May but its best month ever with sales of more than 48,000 vehicles for a 53 percent boost from the year earlier. That gave Kia its highest market share in history at 4.5 percent, according to Edmunds.com’s records. While Kia may cool a tad in June from May, likely due to inventory shortages, Hyundai is on fire in June. Edmunds.com’s forecast for June car sales puts Hyundai on track for record sales and market share. Combined, Hyundai and Kia are predicted by Edmunds.com to see sales up more than 4 percent from May to June and up 34 percent from last June for a record 10.2 percent market share – 5.9 percent for Hyundai and 4.3 percent from Kia, according to Edmunds.com’s forecast."
Japanese - and Korean - Inventories Drop Most (AutoObserver)
http://www.thecarblogger.net/2011/07/kia-motors-america-announces-record.html
2021 Kia Soul LX 6-speed stick
Kia Goes Transparent by Hooking Benoit Morene to a Lie Detector (autoevolution.com)
Gutsy, though. Clever.
Great article about Hyundai and Kia here. Excellent in-depth analysis by Dale Buss:
Hyundai And Kia Prosper Now But Look To Future
By Dale Buss July 25, 2011
http://www.autoobserver.com/2011/07/hyundai-and-kia-prosper-now-but-look-to-futu- - re.html
2021 Kia Soul LX 6-speed stick
"Hyundai Motor Group's Hyundai and Kia units overstated the fuel economy of about 900,000 vehicles sold in the U.S. since late 2010, the company said Friday, citing an investigation by the U.S. Environmental Protection Agency.
It said it will compensate U.S. buyers for the difference."
Hyundai Retreats on Fuel-Economy Claims (Wall St. Journal)