Are Hyundai and Kia for Real?

By the end of yesterday's column, I had drifted a bit off the main topic — no surprise there — and found myself in Hyundai-world, a magical place where the cars kept getting better and the sticker prices kept getting smaller. Well, it was actually a Kia that drove me to distraction, but that's part of the problem.

What I mean is, the two brands have certainly done a lot in this country to sell more cars and trucks, but they've also benefited from ye olde perfect storm of external circumstances. It's no coincidence that their sales have gone up at the same time most economic indicators have gone down. Consumers still need cars and trucks (or at least crossovers), but in today's business environment, people want higher value and lower prices, and that's what the Korean vehicles offer.

On the other hand, it's also what a growing number of other OEMs are offering as well. To take just one random example, Nissan has recently announced it will try to outsmart the Smart fortwo by launching its own lineup of city cars in the U.S. for 2010. The Nissan Micra will, of course, compete on the fuel-efficiency front, but the Japanese automaker has also announced the Micra's low sticker price will also be among its key selling points.
So, what's going to happen to Hyundai and Kia when their biggest differentiator — MSRP — isn't so different from the other guys?

Well, first off, they're going to have to grow some space between their own products. Just to get everyone up to speed here, Hyundai and Kia used to be competitors in the Korean auto industry, but the former bought up the latter in 1998. The current strategy is for Kia to be the brand for younger buyers who want to ride a bit outside of the mainstream. The Kia Soul, with its funky styling and distinctly youth-oriented positioning, is the ideal here, and the Kia Forte and Kia Forte Koup make strong statements as well. These three vehicles are undeniably eye-catching and make a great foundation for a brand that wants to be known for vehicles that are equal parts fun and funky.

The Kia Cadenza (pictured near right) will leverage the same kind of design language when it takes the place of the Kia Amanti at the top of the company's food chain in the near future, and that's good. But the whole concept of a Kia in the entry luxury segment — especially when Hyundai is already there with vehicles like the Genesis — isn't so good. And neither is the idea of a Kia Borrego SUV that's "designed for luxurious travel" per Kia's own Web site. In fact, does Kia really need three different SUVs and a minivan?

Remember, Hyundai covers a pretty wide range of segments on its own, and does so with some pretty strong entries. The Hyundai Elantra and Elantra Touring are gaining a lot of traction in the smaller segments, while cars like the new Hyundai Sonata, Genesis and Genesis Coupe keep attracting a positive combination of attention and sales.

And when you add things up, the Korean conglomerate is selling some 22 different models in the U.S. right now, with Kia and Hyundai entries often competing for the exact same buyers.

I suppose the key to the situation is that, today, the combined international sales of Hyundai and Kia rank the Hyundai Automotive Group as the fourth-largest automaker in the world, trailing just Toyota, GM and Volkswagen. When you put things that way, what's happening in the U.S. stops looking like a small upstart company jumping into the fray with a new approach to the business, and it starts looking like just another huge automaker taking its turn as the flavor of the week.

Select photos via Kia Motors