Kia Motors has come a long way since being rescued from bankruptcy in 1998. So far in fact, that for the last two months it has done the previously unthinkable, outselling its parent in the home market. After decades of Hyundai domination, could we be witnessing the sudden emergence of a new number one brand in Korea?
Kia’s surprise toppling of Hyundai in Korea in May, thought by many to be a temporary phenomenon, was repeated in June. But instead of the mere 400-car lead that made it the number one brand in May, thanks to the new Sportage and K5 models, Kia outsold Hyundai by a startling 6,000 units last month. To place that in perspective, in June 2009, Kia had lagged its parent by some 20,000 cars.
Over the course of 2010, Kia’s new and not-so-new models alike have been finding ever more favour with buyers in the domestic market. Whereas in the first six months of 2009, Hyundai outsold Kia by 80,000 cars, in the equivalent period of this year, the gap narrowed to 41,000.
The Kia K5 got to within 600 units of the best-selling Hyundai Sonata in its first month
Hyundai may also have made a huge mistake with a decision to outsource all small cars to its Indian subsidiary. While the Hyundai i10 and i20 are not even available in Korea, Kia’s little Morning (Picanto) is not only the country’s second best selling model of 2010, but a successor model is only months away.
Looking at the sales chart for June, four Kia cars made the top ten list, but only three Hyundais. The Sonata, the country’s best-selling vehicle for many years, is still firmly in the number one slot with 78,805 sales for the year-to-date. But Kia’s new K5, ironically a rebodied Sonata, got to within 600 units of the Hyundai original last month.
Not only is it unheard of for any car ever to threaten the Sonata’s number one spot in the home market but the K5 also managed to do it in its first month on sale. This same vehicle is due to reach the US and Canada in January as the 2011 Optima & Optima Hybrid, with launches in China and Europe to follow.
There is one big danger for Kia: a notoriously belligerent union
If the K5 outsells the Sonata in July, Kia will truly have arrived, with the shift in the dynamic between Hyundai and its supposed junior partner turned on its head. After all, now that Kia cars are proving to be so popular, and not just in Korea, Hyundais may come to be seen as the second, perhaps more conservative choice for buyers considering both brands.
What then, if anything, might trip Kia up? There is one big danger and it’s a familiar one: a notoriously belligerent union that has organised crippling strikes in every one of the last 20 years. The annual high-risk game of threat and counter-threat over salary and bonus demands is underway.
The new Verna and Avante should soon start to lift Hyundai sales
Hyundai, meanwhile, has just agreed a new wage accord with its own 45,000 unionised workers, marking only the second time in three decades that hugely damaging annual strike action will have been prevented.
With no risk of the production stoppages that have wrecked the ramp-up phases of previous new vehicle introductions, Hyundai’s imminent new Verna (Accent) and Avante (Elantra) models should soon start to lift the brand’s sales at home. So while Kia more than deserves its newfound number one status in the Korean market, it probably shouldn’t get too comfortable in the top dog’s kennel.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
