Will Kia be mistaken for the manufacturers of the Chia Pet?
Will buyers associate the name Kia with “Killed In Action?” as some of the Korean car manufacturer’s competitors secretly hope?
Will you even be able to buy a Kia in the Midwest?
All good questions with no concrete answers.
And worst of all, you weren’t even able to check out a new Kia Sephia sedan or Sportage utility vehicle at the Chicago Auto Show. That’s because the automaker, which has concentrated for the last three years on reaching import-oriented buyers in the West and the South, skipped most Midwestern auto shows in 1997.
“Our philosophy is to be at shows where we’re selling vehicles,” said Gino Effler, a Kia spokesman.
“I’m guessing that 1998 will be the earliest we’ll be selling cars in the Chicago area. We haven’t picked out our Midwest dealers, and we haven’t conducted any consumer surveys regarding familiarity with the product. We haven’t even gotten that far yet. Our focus this year is on the East Coast and New England.”
By 2000, though, Chicagoans should be able to select from a basic four-vehicle lineup, including the subcompact Avella and mid-size Credos, through the company’s U.S. network. Kia also is developing a mini-van, a larger sport-utility and a large family sedan in Korea.
Until then, Effler says he knows there are misconceptions about Kia that will have to be dealt with–such as on which side of the demilitarized zone the vehicles are built.
Even people who cover the auto industry sometimes get confused.
A San Francisco journalist attending a recent West Coast auto show sat in a Sephia and asked Greg Warner, executive vice president and chief operating officer of Kia Motors America, if the car was built in North Korea. “Yeah, that’s why it’s red,” he quipped.
But she didn’t get the joke. “No, no, it’s built in South Korea,” Warner quickly corrected.
Kia executives say they plan to do a lot of consumer education about the vehicles built by a one-time bicycle manufacturer.
“When we tell people that Kia is part-owned by Ford and Mazda, the credibility factor goes way up,” Effler said. “Familiarity breeds credibility.”
As of late 1996, the company had 200 dealers in 22 states, covering less than 50 percent of U.S. households. Warner said he hopes to be selling Kias 550 dealers by early 1999, “depending on manufacturing capacity and product availability.”
He is also forecasting steady sales growth to 100,000-plus units by 1999–about the level of Mazda or Volkswagen–from about 40,000 in 1996.
Kia’s planned to make a three-year push to attain big-league status among automobile importers in the United States. But that has turned into what experts say will be a seven-year pitch.
“Kia is cash-starved right now and doesn’t have the resources to do any sophisticated marketing or expansion into the U.S.,” says an executive at competitor Hyundai, South Korea’s biggest automaker. “Unlike other Korean manufacturers, all Kia makes is cars. That means the company doesn’t have deep pockets or a godfather to fund extras like sophisticated marketing efforts or consumer surveys.”
With Kia’s parent in Korea pouring its resources into transportation-starved Third World markets, it may take the U.S. subsidiary until 2000 to divert enough product to become a player in the American market.
That’s about five years behind the timetable established by Warner, a longtime Asian import veteran who helped launch Hyundai in the U.S. and who jumped ship for Kia in late 1992.
Hyundai and the leading Japanese importers “are starting to hear our footsteps now as we move up the Eastern seaboard, but we’re not a threat yet to anybody,” said Warner, without a trace of disappointment.
The original scheme was to launch the Kia brand in the United States in late 1993 in Western markets, expanding across the southeast and up the Atlantic coast in 1994 and filling in the Midwest in 1995.
But the Korean affiliate of Ford (which owns 10 percent of Kia) and Mazda (8 percent) has been capitalizing on overheated demand at home, where it ranks a distant No. 2 in sales behind Hyundai, and in emerging export markets. Kia cars and trucks are now sold in more than 120 countries.
The shifting priorities, however, have shorted Kia’s U.S. arm on production capacity and development capital, effectively delaying Warner’s domino-style rollout plans.
But Warner’s U.S. team continues to lay the foundation. for the coming assault.
“Having a full product line at this stage is not a requirement,” Warner insists. “Right now, we’re still establishing the Kia brand name here and helping the parent company get more attuned to the North American market.”
If Warner sounds cautious, it’s because he has trod the import pioneer’s path once before. The one-time Toyota sales executive helped launch Hyundai’s U.S. operation 10 years ago, weathering the company’s dizzying ascent up the sales chart in the late ’80s and equally spectacular plunge in the early ’90s.
The problem, according to Warner and other experts, was that Hyundai’s growth curve was too steep and its success too fragile to sustain, given the dubious quality of its cars.
Kia also has taken considerable pains to shrug off the black eye that all Korean automakers believe they inherited from Hyundai.
Kia moved swiftly to correct early problems with fit and finish and other glitches on the first batches of Sephias it received in 1994 and has been responsive enough to the needs of its dealers to merit a No. 5 ranking in the 1995 J.D. Power Dealer Satisfaction Index.
Warner insists he’s not concerned that the impending arrival of smaller Korean companies such as Daewoo, Ssangyong and neophyte Samsung could further impugn the Korean industry’s shaky quality reputation.
He dismisses the newcomers, saying: “It’s hard to be scared of a ghost.”
COMING TO KIA’S SHOWROOM
Central to Kia’s game plan for the U.S. is an ambitious slate of new and redesigned vehicles that will help the company flesh out its American lineup over the next four years. Among the future products:
– Sephia, Kia’s price-busting Corolla fighter, is to get a full makeover in the fall. The ’98 Sephia will sport a softer, rounder silhouette, plus a 1.8-liter, dual overhead cam, 4-cylinder engine. A convertible may be a viable option for ’99 or 2000.
– Sportage, the company’s low-end RAV4 rival, receives a modest facelift, plus a new instrument panel and dual air bags in late 1997. A redesign is slated for model year 2000. By then, Kia expects to add a short-wheelbase, two-door Sportage softtop and perhaps a larger, Explorer-size 4×4 to its sport-ute stable.
– Credos, a mid-size Accord competitor sold in the home market, is being updated and fitted with a Rover-designed 2.5-liter, V-6 engine in preparation for a U.S. introduction in early 1999.
– A smaller-than-Sephia subcompact, based on the next-generation Aspire/Avella, should arrive stateside in mid-1999, priced from less than $10,000. Ford’s American dealers are ditching the Korean-built Aspire in favor of the Spanish-built Fiesta, leaving Kia to market the car under its own name come model year 2000. The Koreans, however, haven’t decided whether they will sell this low-priced four-seater in the U.S. as a four-door sedan, a three-door hatchback or both.
