Tuesday, June 29, 2010

"Kia to disappear by next year"


So says market analyst Douglas McIntyre.

From the Orange County Register:
An analyst with 24/7 Wall St. has marked Kia Motors as one of 10 brands that will “disappear” in the year 2011.

The South Korean automaker, whose U.S. headquarters are in Irvine, joins others on Douglas A. McIntyre’s list such as Merrill Lynch, Readers Digest, Blockbuster, Dollar Thrifty, T-Mobile and BP, which is currently trying to mop up millions of gallons of oil in the Gulf region.

But Kia Motors? Really?

In his analysis, McIntyre states: “Kia Motors Corporation is one of the two car brands of Hyundai of South Korea. It has always been a marginal brand. Its stable mate, Hyundai USA, has a reputation for high quality cars like the Sonata and Genesis. Kia sells ‘low rent’ cars and SUV nameplates like the Sorento and Rio.

“As GM and Ford have already discovered, it is expensive to maintain multiple brands and storied car names, including Pontiac, Saturn, and Mercury, are disappearing. Most Kia cars sell for $14,000 to $25,000. Hyundai has several cars in the same price range.”

He goes on to say that Hyundai will “take a page from several other global car companies and dump its weakest brand.”
Given that Kia America's HQ is in OC, this is not a claim the locals take lightly, including the OCR. But their rooting for Korea's #2 automaker aside, how likely is this prognostication to come true?

Frankly, I think the answer is "not too terribly." When some folks were wondering a few years back if Hyundai shouldn't spin Genesis off as a luxury nameplate (including me), others were pointing out that perhaps the idea was to raise Hyundai's quality enough that Kia would be the "everyday" brand and Hyundai would become the upscale make.

That role seems to fit the two sibling automakers nicely, except Kia itself seems to be rising in the public's eye. And really, is that a time to fold the tents on a nameplate? The two automakers have genuinely been separate companies, even if they are intertwined, so why change that recipe now? If anything, this provides two car Korean companies for the public to consider, which in the mind of someone purchasing a car might give a little more weight to both of them. (Am I making sense here?)

And really, how successful would Korean companies be if they just did what American companies are doing, like shutting down well-known brands to save a few bucks? It seems Korea might do better if they avoid following in the same footsteps as their Detroit counterparts.

Anyhoo, this prediction sounds a bit like the analyst doesn’t know much about Kia and Hyundai (and their relationship) beyond Hyundai now having ownership over Kia. And I dare say this is one reason why Asian companies often befuddle American businesses or otherwise fly under the radar: the analysts and others don’t get an accurate picture of them beyond the superficial things that can be gleaned from English-language reports on the top corporations in South Korea, Japan, Taiwan, etc.

Now having said all that, I so want to ride in that toaster.

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