Kia Thinks Outside the Box

November 2, 2010

Quick, what comes to mind when you hear the name, “Kia?” Is it a particular vehicle? Is it an image of a brand? If you’re a baby boomer, you may still regard the Korean brand, corporate sibling of Hyundai (which owns 34 percent of Kia, and the two brands share vehicle platforms and powertrain technology) as a maker of lower quality vehicles. If, however, you’re a younger buyer, you may associate Kia with the highly popular Soul.

Both views are altogether reasonable. Here’s why. Kia’s first U.S. sales began with the Sephia subcompact and Sportage SUV in 1994. Both vehicles had numerous quality problems during their early years. Consumers, say the analysts and automotive experts (in other words, the people who study all the data), have long memories. They remember what products were like five to 10 years ago. Therefore, boomers may still remember Kia products from the 2000 model year and haven’t changed their perception of the brand. On the other hand, some have undoubtedly changed how they see Kia products, as evidenced by the mounting sales. But more on that in a minute.

Kia has developed uniquely designed vehicles – six new or redesigned since January 2009 with the redesigned 2011 Kia Optima that goes on sale this month – and their marketing campaigns have been nothing short of phenomenal. The ads are edgy, clever, and attention-getting. From the Sorento ads featuring partying stuffed animals that launched during Super Bowl to the gold chain-bedecked hampster rappers in the Kia Soul, the automaker is clearly appealing to younger buyers.

Soul, introduced in February 2009, is Kia’s most bold statement that the car company is targeting Mazda and Scion to claim younger buyers. The boxy hatchback with the futuristic looks is – Kia thinking outside the box, so to speak.

The strategy appears to be working. Kia is one of three brands to increase sales in 2009, according to Automotive News, and sales are up 12 percent in 2010. That beats the overall market’s 10 percent increase.

Quality still mid-pack

According to several sources Kia quality is still a ways from the top. In the J.D. Power and Associates 2010 Initial Quality Study, Kia ranks 26th place with 126 problems per 100 vehicles. The industry average is 109 problems per 100 vehicles. Interestingly, Hyundai (Kia’s corporate sibling) ranks in seventh place with 102 problems per 100 vehicles. In Top Three Models per segment, Hyundai Accent is the highest-ranked sub-compact and Elantra the third highest-ranked compact, while the Kia Sedona is the second-highest ranked minivan. Kia’s perceived quality is clearly overshadowed by Hyundai’s.

In the 2010 Consumer Reports Automaker Report Cards, Hyundai and Kia have “shown the most dramatic improvement, jumping to fourth place from ninth last year.” The jump is due to newer vehicles such as the Hyundai Genesis and Elantra sedans, Santa Fe SUV, and Kia Optima sedan. In the Consumer Reports rating, all Hyundai and Kia models continue to improve in reliability, “with only the Kia Sedona minivan below average.”

On the upswing

The new or redesigned models since Soul all share common exterior design cues – such as the “tiger nose” grille on Soul. And Kia products are loaded with high-technology features as standard content, including Bluetooth wireless connectivity and USB ports to connect iPods and other portable devices. As a side note, the 2010 Kia Soul was named one of and Parents Magazine 15 Best Family Cars for 2010. The Soul was one of three winners in the budget category (along with Honda Fit and Mazda5).

Automotive News cites September consideration rates for two Kia vehicles as examples of how buyers are moving toward the automaker’s new products. The September 2010 consideration rate for the redesigned Kia Sorento CUV is 12.1 percent versus 4.2 percent in September 2009. The 2011 Kia Forte (replacement for the 2010 Kia Spectra) is 6.1 percent this September compared with Spectra’s 1.3 percent in September last year.

Citing increasing residual values (up 6 percent from 2009), higher transaction prices, and the attraction of more affluent buyers as evidende of Kia’s aggressive push to gain consumer recognition, the automaker’s U.S. sales head, Tom Lovelace, told Automotive News that 7 of 10 Kia buyers now have prime credit and an additional two are near-prime. Incentive spending is also down and dealers are now selling Kia product based on its merits.

Along with the all-new 2011 Kia Optima sedan, the automaker is introducing the all-new Kia Forte Five-Door this fall.

Can Kia catch up with or even move past Hyundai to finally get out from under its shadow? Both offer the same 10-year/100,000 mile warranty. Both produce models using the same vehicle platforms and powertrain technology. But each differentiate themselves with design and other details, as well as marketing.

Just goes to show you that sibling rivalry can really get intense. And, by all reports, these siblings are very intense competitors. But Kia is setting its sights beyond the family.

Kia is thinking outside the box. Let’s see how well it pays off in the years to come. They’re certainly on the right track to gain more converts to the brand.

Check out The Car Connection reviews of the 2011 Kia Optima, 2011 Kia Sportage, 2011 Kia Sorento and 2011 Kia Forte Five-Door.

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