Kia Motors America may be marking 20 years in the US this year but, despite 535,179 sales in 2013 (down 4% on 2012), the recent hit of 5m cumultative, half year 2014 volume up 7.2% to 297,413 and around 765 dealers in all 50 states, still insists its main mission is “awareness” and that the brand is “still a bit player”.
Against Toyota’s H1 tally of 1,165,607, Honda’s 739,436, Nissan’s 704,477, Subaru’s 238,008 and Big brother Hyundai’s 364,434, yes, but the “bit player” nonetheless creamed Mazda (156,431) and Mitsubishi (39,672) as well as premium groups BMW (181,534) and Daimler (167,754) plus VW group (287,719). And all of those have been in the US from anywhere since the dawn of time to the 50s and 60s (Japanese) or ’70s (Hyundai).
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Chief spokesman Scott McKee’s relative modesty is despite the record monthly sales of 60,087 units in May when the Optima – made locally in Georgia – set a Kia single nameplate monthly record of 16,483 and the brand, which 20 years ago was essentially recycled Mazdas, this year reached seventh in JD Power’s Initial Quality Survey behind Porsche, Jaguar, Lexus, Hyundai, Toyota and Chevrolet.
The recent history McKee lays out for his UK visitors suggests a brand making carefully measured steps with some big local spends in the last decade. The Mojave hot weather test centre – shared with Hyundai – opened in 2005, the US plant was announced in 2006, the new corporate HQ in Irvine, California and adjacent design centre were opened in 2008, the first US design, the Soul, was launched in 2009, the year Georgia production started, and 2010 saw the locally made Sorento on sale while the Sedona [aka Carnival] minivan completed the launch of new model lines with the ‘[Peter] Schreyer’ styling touches including the now-distinctive ‘tiger’ nose. The first Superbowl ad (a sign you made it; the most premium TV slots you can buy in the US) screened in 2010, the year the three millionth Kia was sold and the first turbocharged model went on sale.
Milestones in 2011 included NBA promotional links, the first hybrid, local Optima production and racing successes, 2012 4m sales, the first half million in a year, and an 87th place rating on the Interglobal 100 brand charts; 2013 a rise to 50th on the same table (ahead of US icon Chevrolet) and the announcement of the K900 luxury car (pitched as premium luxury for a medium luxury price) while 2014 will see, among other things, the first [Soul] EV, 5m US sales and the launch of a redesigned (and much better looking) Sedona as well as the roll-out of the very credible V8 K900 to more states.
California
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By GlobalDataAlthough Nissan has fled to Tennessee and Toyota soon will be packing for Texas, Kia is happy for now in California, though McKee and fellow executives do acknowledge the state can be an expensive place in which to do business. As well as the headquarters, design centre and hot test centre, there’s a western region office and Kia University training centre for dealer staff in Irvine and a distribution centre (in Riverside in what is known in the LA region as ‘the inland empire’).
Some US$1.4bn has been spent on Kia’s US facilities and the Georgia plant’s 360,000 capacity means some 40% of vehicles sold in the US are assembled there.
Among McKee’s tales is the one about Kia initially being mistaken for the Swedish flat-pack furniture retailer IKEA; less of a problem in 2013 when seven new or major redesign models made their entrances.
The K900 – essentially a V8-powered, glass roof version of Korea’s K9 – is the US unit’s biggest gamble yet “defying industry convention” to challenge the likes of Lexus “somewhere between premium mid-luxury and luxury” sector at US$66,000-ish versus the Japanese brand’s $80,000 for an LS460 (it likely will sell for $76,000, according to Edmunds.com, vs $64,500 for the Kia). Brave Kia also targets the BMW 7-series, Audi A8 and Mercedes S-class but isn’t giving any targets or making ridiculous claims as the model – its first V8 and rear wheel drive car for the US – is still being launched. And quite a step up from previous top dog, the $35,000-$42,000 Cadenza.
Strategy
McKee said Kia’s current US strategy is to concentrate on quality, strengthen the brand, elevate the ownership experience and identify new segments for further growth though, when you look at the range, the menu is already pretty much soup to nuts.
Product planning chief Orth Hedrick said the US is the largest of Kia’s five main markets and has two models – Sedona and Optima – which can easily top 100,000 units a year. Specific US conditions for which models need tailoring include the fact that local buyers travel longer distances more frequently with more people in the car – Americans “will drive four to five hours before they get on a plane”.
The three global studios – Seoul, Frankfurt and Irvine – compete to win the design work and this is then finalised in Korea. Hedrick travels a lot to Korea in the inception to two years out design freeze phase of a new car and, 18 months out, early prototypes start their testing phases – including hot and humid at Mojave – in the US to tweak suspension setting, HVAC and other local specifics.
“The big variables now are supplier quality, assembly quality now is quite uniform,” he notes. As part of the job, he attends all the major auto shows, spotting future trends. Almost all of the European brands are positioned as premium in the US and he is noting more sneaking down into the “mainstream space” as well.
That’s one reason for the K900 – the lines between segments are “blurring and you don’t need to pay for the label” with a car like the new Kia. The size of the US market gave the local unit a larger percentage of influence over what it got – hence the V8 and transparent roof – as head office could see the potential in such a ‘halo car”. V6 variants may be added later.
Diesel – a mainstay of Kias in Europe and a growing proportion of European premium brands’ sales in the US – may come around 2017/18 when US and EU emissions standards coincide.
The Optima hybrid currently takes 3-5% of the nameplate’s sales, the Soul EV is soon to be launched as a 50-state car (unlike some rival EVs) and plug-ins “are being worked on”.
Response
McKee likes the way Korean head office responds to requests for changes to new models. With premium import brand experience prior to Kia, he said: “I’ve never seen a manufacturer move more quickly than Kia.” He noted that the parent made 17 changes in six months to the original US-spec Soul and that feedback from customers, dealers and the media is “taken very seriously, listened to closely and put into action”.
Despite that, the US unit would like to be more involved in the design process a little earlier, having a say in decisions like the type of suspension used, rather than only tweaking springs, antiroll bars and dampers, as at present. Other running changes made quickly for the US have includes things like distinct radio tuning knobs, shut off flaps in vents, switch locations and seat design.
