By Jeremy Cato
Pemberton, British Columbia – With a five-year or 100,000 kilometre warranty backing a spate of new models, Kia is aiming for major growth in Canada.
“There has been a lot of money spent on Kia products,” says Kia Canada president Bill Porter, who joined the company two years ago from his previous post as vice-president of sales for Nissan Canada. “The Koreans were smart enough to know they had a problem with the product and they’ve done something about it.”
Kia Canada is aiming to nearly double its 2004 sales volume of just over 26,000 vehicles, to 50,000-plus by 2007. To get there, it’s launching three new models this year, including the Hyundai Tucson-based 2005 Sportage, a new Rio subcompact and the Magentis midsize sedan, based on the all-new 2006 Hyundai Sonata. Hyundai owns 60 per cent of Kia.
Next year, an update of the Sedona minivan is expected, and there is unconfirmed talk of an all-new coupe/convertible in 2007. The very successful Sorento midsize SUV, which now holds 4.7 per cent of its segment in Canada and in Porter’s words “is over-achieving”, is due for a remake in 2008.
Porter’s job is to make sure Kia’s 150 dealers are ready to grow. “The dealer body needs work and we are very aggressive in this area. We flushed out about 15 per cent last year and there is about 20 per cent more to go,” he says. “I was very honest about this in our dealer meeting. I said if you want to grow with us, that’s great. We’ll help you do that. If not, tell us and we’ll help you get out.”
The real trick to all this growth, however, is that is will be based entirely on conquests – taking buyers away from other manufacturers, primarily the domestic ones.
“We can pull easily from the domestics. We’re pulling huge numbers from the domestics. It amazes me. But we’re not dumb enough to think we can take from the top-tier Japanese,” he says bluntly, though it’s clear he would eventually like to do just that.
Over the next five years, Kia plans to build an image as a young, sporty division, creating a Kia with attributes similar to Honda. Honda is one of the few car companies able to sell its vehicles with a minimum of incentives, cash-back deals and cut-rate financing, and Porter would like Kia to be positioned that way, too. “I am not going to build a (car) company based on a cheap price,” he says.
Globally, Hyundai and Kia combined produced 2.9 million units last year, about the same as Honda. By 2010, the alliance is aiming to produce some 5.6 million units. General Motors, the world’s largest automaker, produced 8.3 million units last year.
It’s a bold and recently-hatched plan. It has taken some time to get to this point; Hyundai purchased a majority stake in Kia, Korea’s oldest car company, in 1998. Kia was formed in 1944 as a bicycle parts manufacturer, adopting its current name in 1951. It didn’t start building motorized vehicles until 1962, when it introduced a three-wheeled pickup. Introduced in 1974, the Kia Brisa was Korea’s first passenger car.
In the years since Hyundai became the majority owner, the two companies have been working to consolidate platforms and shrink the number of engine offerings. Sharing platforms and powertrains saves manufacturing and research and development costs. There have also been labour issues to sort out and quality problems to overcome.
Now, though, an undisclosed but very large investment in products is leading to new models which are more than just Seoul cars repackaged for North America. The next generation of Kias and Hyundais will not only be better, they will also be different, say officials from both companies.
For instance, the old Sportage, which was discontinued in Canada in 2002, was a body-on-frame SUV used only by Kia. The redesigned 2005 Sportage is a unibody vehicle that shares a platform, powertrain and similar design with the Hyundai Tucson. A similar strategy is unfolding with the Hyundai Sonata and Kia Magentis.
To differentiate the two brands, Kia and Hyundai designers work separately to prevent vehicles in the same segment from looking too much alike. Kia is also working on programming engine management software differently for its respective line-up, to create a more aggressive power curve.
Porter concedes that Kia is still a couple years from having the full portfolio of products needed to move the brand ahead as a fun-to-drive automaker. But he is confident, based on the progress made to date and the products planned for the future.
“I’m not interested in building an identity based on $199-a-month (lease) payment. We’re going to create something different, not just a Kia store,” he says.