Kia Plans 2013 Product Push, Further Expansion Into High-Volume Segments

DETROIT – Kia plans to introduce seven new or refreshed vehicles in the U.S. next year, including a redesigned Sorento cross/utility vehicle and Forte small car to be previewed at the Los Angeles auto show in November.

“We are going to have a very, very busy upcoming auto show circuit; (we’ll) rack up some frequent-flyer miles,” says Tom Loveless, executive vice president-sales at Kia Motors America.

Kia has been flying high since 2008, when its big push into the U.S. began with a $1.4 billion investment in an Irvine, CA, design studio and headquarters and a 360,000-unit capacity assembly plant in West Point, GA.

The Korean auto maker’s bet on the U.S. came ahead of the country’s worst economic collapse in the post-World War II era. But the upstart brand defied odds by combining a laser-focused design direction with a quirky marketing campaign featuring hamsters driving the flagship Soul small CUV introduced in 2009.

Since then, Kia has posted 24 straight months of record monthly sales, while both initial-quality and residual-value scores have shot through the roof to make it the fastest-growing mainstream brand in the U.S., Loveless says.

Last year, Kia sold 485,492 vehicles in the U.S. for a 3.8% market share, according to WardsAuto data. So far this year, deliveries of 386,809 units have put it on pace to witness another year-over-year gain. Its share through August was 4.0%.

Three of the auto maker’s models – the Soul and Sorento CUVs and Optima midsize car – are on track to surpass 100,000-unit sales each for the first time.

But as Loveless readily admits, Kia faces capacity constraints at the West Point plant, which sources product for 40% of its sales, as the brand stretches to compete in bread-and-butter segments.

Sales of the Sorento, for example, fell 25% in August and were down 12% through the first eight months, in part because Kia was unable to demand. The Sorento shares assembly space with the Santa Fe CUV from sister auto maker Hyundai.

Loveless says new entries into the midsize CUV segment, such as the redesigned Ford Escape and Honda CR-V, are putting pressure on Kia’s best-selling vehicle globally.

“Not a surprise to us,” he tells WardsAutoafter a presentation to the Automotive Press Assn. here. “We’re still delivering 10,000 Sorentos a month, and that is what our business plan calls for.”

Loveless says Kia might need another entry in the segment, one of industry’s hottest as of late.“That segment will continue to grow, as competitive as it is.”

Kia also faces the challenge of maintaining momentum with the Optima. The introduction of the redesigned model finally is making the car competitive in its segment. Kia tripled sales to 84,590 units in 2011.

The Optima has been booking big year-over-year gains each month this year, while other competitors in the segment are struggling to match 2011 results as fresh entries keep hitting the market.

“We essentially did not compete in the midsize-car segment,” Loveless says. “You could take off your shoes to count the number of cars you sold. Now, (the Optima is) on pace for 125,000 to 150,000 (sales). A lot of that is incremental business fueling the growth.

“But we’ve staked out a position of relevance in a very competitive segment, and we’ll continue to differentiate ourselves from marketing and product-design standpoints. It is going to be a challenge. It is a tough segment.”

The executive does not discount sourcing more production of the Sorento and Optima from Korea to alleviate capacity constraints in the U.S., but as Loveless tells his dealers, “We’ll build them, and you sell them. That’s how you make money. You don’t make money when cars sit on your lots.”

Loveless declines to elaborate on the types of products Kia plans to introduce in the next 12 months, suggesting only that the auto maker’s recent track record has been to enter larger-volume segments.

“If you eyeball the segments and look at where the expected growth is in the out-years, you can get a good feel for where we want to go,” he says.

Mike Sprague, executive vice president-marketing and communications at Kia, confirms the auto maker tweaked its stop/start technology for introduction on the ’13 Soul and Rio small car. The optional technology, called “Idle, Stop & Go” arrives a year later than planned and provides an extra 1 mpg (0.4 km/L) in fuel economy.

Sprague says the auto maker worked to make the transition between powering on and off more seamless. “It was just a very odd experience for the consumer, so we smoothed that out and it’s a much better experience.”

The feature comes as a $500 “Eco” package option to the 1.6L direct-injection 4-cyl. engine in the Rio and 2.0L port-injected 4-cyl. in the Soul. The option has been available for about a month.

“The mix is still relatively low, but as gas prices continues to rise, we think we’ll see more interest,” Sprague says of the technology, which auto makers are expected to widely adopt in the future to meet strict new federal fuel-economy rules.

“The biggest challenge right now is making people aware of it and helping them understand it,” he adds. “As more and more other brands add the feature, I think we’ll see acceptance increase.”

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