Feature: Will Kia’s lack of history hinder its upscale brand aspirations?

By John LeBlanc SEOUL, South Korea –It only takes a short visit to the company’s corporate museum to get an idea of the relative youth of Kia Motors as an automaker. Unlike the public shrines built by surviving pioneers like Germany’s Mercedes-Benz or America’s Ford (respectively founded in 1881 and 1903) each becoming top tourist attractions in their own right, housing hundreds of cars dating back to the birth of the automobile, South Korean Kia’s collection of historic automobiles is measurably less imposing and more private. Housed in one of the over 80 non-descript buildings behind a secured perimeter at its research and design facilities it shares with corporate sister-brand Hyundai in the countryside outside of the metropolitan sprawl of Seoul, 10 historic Kia vehicles are all it has to show. The company started out hand-making steel tubing for bicycle parts in Seoul in 1944. Seven years later, Kia started making whole bikes. By 1961, motorcycles. Two years before Hyundai started making the Pony, Kia built Korea’s first production car, the Toyota Corolla-like Kia Brisa, in 1973. After a financial crisis in Korea bankrupted Kia in the late 1990s, the Korean government stepped in and asked rival Hyundai to take over the struggling firm to become what is known today as Hyundai-Kia Motors. With the aid of combined product and drivetrain development plan, the two Korean brands have become one of the world’s fastest growing automotive brands. According to Automotive News, during the first half of 2009, Hyundai-Kia Motors ranked No. 4 in the world with sales of 2.1 million units, right behind Toyota, General Motors and Volkswagen. In Canada, Kia sold over 46,000 cars last year, up 23 per cent from the previous year. Sales so far in 2010 are up 25.5 per cent. And last month saw the first time in the company’s 11-year history in Canada when Kia’s sales reach over 5,000 vehicles sold in April; the 16th straight month of consecutive sales growth. Apparently Kia’s lack of auto making history and brand cachet aren’t keeping Canadians out of its showrooms. But Kia has bigger aspirations than being known as your cheap-and-cheerful automotive brand. In an attempt to avoid losing customers that may graduate to more established (and expensive) brands as their incomes increase, Kia wants to move upmarket with them — in a hurry and in a big way. Kia’s multi-pronged plan calls for an aggressive new product strategy, ratcheting up the quality scores, designing more desirable cars, offering better performance, selling value-oriented environmentally-friendly alternatives — and eventually — creating some image-building niche vehicles. On the product front, Kia knows that in a competitive market, new product sells. So by 2012, the automaker will have replaced its entire lineup. This year past year has seen the introduction of the all-new compact Forte sedan and Forte Koup, Soul wagon and Sorrento mid-size crossover. Over the next 18 months, expect a new Sportage compact crossover, Optima (née Magentis) mid-size sedan, as well as a Cadenza full-size sedan to replace the aging Amanti (see accompanying article.) After the mainstream products have been put in place, expect Kia to start adding even more emotion to the lineup. “Once the full range has been replaced by 2012, we need image cars,” said Soon-Nam Lee, Kia’s director of overseas marketing in a discussion at Kia’s headquarters in Seoul. Although not confirmed, a production version of the 2008 Soul’ster concept (a convertible version of the Soul) and a retractable hardtop coupe of the 2007 Kee concept are the most likely candidates to make it. The addition of offering more all-wheel-drive models and clean-diesels is also being discussed as a way to differentiate Kia in the marketplace and better compete with brands like Subaru and Audi. Although Kias are ranked low in perceived quality, the reality is much different. Between 2002 and 2007, Kia was ranked as the fastest improving non-luxury brand in J.D. Power Initial Quality surveys. “Today, we’re a little bit behind the industry average. But that has a lot to do with the 2008 and 2009 vehicles that are being measured. We expect the numbers to only improve once those models are replaced,” said Kia product manager Ken Hong. One way to improve the perception of a car brand’s quality is through styling. As such, one of the Kia’s most important recent hires has been former Audi designer, German Peter Schreyer. The man credited with the original Audi TT has been busy at Kia since 2006, creating a new design language for the Korean brand. And he fully admits, the lack of design history has been a challenge. Today, Schreyer says you can “feel” the Kia design DNA through the new product’s grille, lighting and overall proportions. But he also admits, it’s been very difficult, and “not so easy” to establish a “face” for the brand with its lack of history. While Schreyer said the design language at BMW and Audi are always an ongoing development, he wants Kia’s styling to have the same legs. He feels the new 2011 Sportage (coming to Canada this August) is the best example yet of Kia’s new looks. “But we are already working on cars for the next generation. It always goes on and on . . . ,” adds Schreyer. To back up Schreyer’s penmanship, Kia is also adding performance to its repertoire. With the addition of direct-injection and turbocharging to its latest engines, Kia is boasting best-in-class power and fuel economy in most of its new vehicles. But perhaps the automaker’s biggest opportunity in the future will come from the challenge of offering gasoline-engine alternatives, but for a reasonable price. “We may be late, but we want to be the leader in affordable, eco-friendly cars,” said Thomas Oh, head of Kia’s North American marketing. While a gasoline-electric hybrid has already been announced for the 2012 Optima sedan, Kia will also sell a liquid-propane hybrid model of its Forte this year in South Korea. And its biggest breakthrough yet may come in offering a low-cost fuel-cell electric vehicle. Today, Kia has a test-fleet of Borrego Fuel Cell Electric Vehicles SUVs, developed and built at its own facility in Korea. Between 2012 and 2014, the automaker expects to be able to produce 1,000 fuel cell vehicles per year, tens times that on an annual basis by 2015. Other automakers are making similar FCEV production claims. But Kia’s differentiator in the future may be the cost. The goal is to offer FCEVs at “about one-third the cost the competition,” or around $50,000. Although he was specifically mentioning the work being done on the Borrego FCEV, Kia fuel cell group’s principal engineer, Byung-Ki Ahn, best summed up the South Korean automakers’ overall upmarket ambitions: “We’re not sure if we are number one in this area, but I think we’re the most aggressive.”

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