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FEBRUARY 23, 2004
Kia's New Joyride In The Old World Continental buyers like the Korean cars' prices -- and even their looks Hawking Korean cars in Europe: Not long ago, the idea seemed laughable. Sure, Kia Motors Corp. and its parent, Hyundai Motor Co., are making inroads in the U.S., where young drivers like their high-powered sport-utility vehicles, generous warranties, and oh-so-affordable prices. European drivers, though, are much more finicky than Americans about design, and have their own domestic crop of low-budget, well-built cars from which to choose. Well, Europeans seem to have put aside any bias they might have had against Korean cars. Want a Kia Sorento? Get in line -- there's an average 10-month wait a year and a half after the SUV's European debut. At Kia dealerships in Milan, Italians are happy to pay 26,000 euros a pop for Sorentos, about 2,000 less than an Opel (GM ) Frontera. Other Kias are selling fast, too. "We've chosen Kia because it's very spacious and cheaper than its competitors," says Ambrogio Gorla, who traded his Opel station wagon for a Kia Carnival minivan. All told, Kia sales in Europe jumped 41% last year, to 126,500 cars. MARKET TURMOIL. Now, Kia plans to more than double sales on the Continent. By 2005, the company wants a 2% share of the European market, compared with just 0.8% today. Toyota, by comparison, has a 4.7% share, while Nissan has 2.8%. "We must build up our presence in Europe to be recognized as a global brand," says Woo Kyung Ho, Kia's overseas sales director. Kia's growth is a sign of how much the European auto market has changed -- and of how shrewd the Koreans have gotten at exploiting it. The low end of the European car market has been in turmoil of late, with Fiat, General Motors' Opel (GM ), and Ford (F ) all battling to reverse huge losses and update aging product lines. What's more, Europeans have developed a fondness for minivans and SUVs, models that Asian carmakers are old hands at making. Kia has cannily rolled out SUVs and minivans in Europe that are equipped with fuel-efficient diesel engines, the preferred technology on the Continent. And the Koreans have paid more attention to styling. With its soft, round curves, the Sorento SUV has caught the eyes of Italians, who have been deserting Fiat. "Korean cars had good prices but were lacking in design," says Mauro Tedeschini, editor-in-chief of the car magazine Quattroruote. "This one surprised everyone with its European look." The quality is getting better, too. In 1999, motorists reported 333 problems per 100 Kias, 90% more than the industry average, according to J.D. Power & Associates Inc. By last year, the auto maker had improved to 168 problems per 100 cars -- still not stellar, but a far more respectable 26% over the average. In 2002, J.D. Power ranked Kia the world's "most improved" brand, and last year it was the third most improved after Suzuki Motor Corp. (SZKMF.PK ). of Japan and Ford Motor Co.'s Mercury. Kia is about to launch a model offensive to complement the Sorento and solidify its gains. Management expects the Picanto Supermini, with a one-liter engine, to be its best seller in Europe this year. Its sporty styling will likely appeal to teens and twentysomethings, and it offers more legroom than European and Japa-nese rivals. The small, diesel-powered Cerato sedan will come out in May, followed in the fall by a small SUV code-named KM. Then in spring 2005, a subcompact code-named JB will compete with Opel's Corsa, Ford's Fiesta, Renault's Clio, and Fiat's Punto. Some new models are being designed at Kia's new $62 million research and development center in Frankfurt, and will roll out of a $1.2 billion plant to be built in Poland or Slovakia next year. "We now have our infantry divisions equipped with ammunition," proclaims Oh Tae Hyun, Kia's director of export planning. The European car wars just got hotter.  By Moon Ihlwan in Seoul, with Maureen Kline in Milan Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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