Kia rolls dice on new U.S. product assault

LAS VEGAS - To put in the local parlance of this gambling mecca, Kia Motors America Inc. appears to be a sure thing.

The Korean importer, already on a roll with sales up 17% in the first quarter (including a 30% rise in retail sales) and the second best-selling small sport/utility vehicle (SUV) in America, is planning a string of new models over the next 18 months that will more than double the breadth of its lineup.

By the end of 2001, Kia will add a minivan, midsize sedan and compact SUV to its U.S. showrooms, hoping to work its entry-level market magic in these more profitable segments.

It's no wonder KMA President B.M. Ahn, asked whether sales will increase this year, answers simply, "Without a doubt."

The rollout plan calls for a new, under-$9,000, 1.5L subcompact sedan called the Rio to debut this month as an '01 model. That will be followed by an '01 midsize sedan, codenamed the MS and based on the Hyundai Sonata, slated to hit dealerships in November.

In June 2001, Kia expects to launch sales of the Sedona minivan. It will bow as an '02 model, be spot-on in size with the popular Honda Odyssey and offer a standard V-6 for the price of a 4-cyl. Dodge Caravan. The capper will be a larger sport/utility vehicle, dubbed Sportage II for now. It will measure up to an Isuzu Rodeo and hit dealer lots sometime in '02.

All this new hardware won't change KMA's very basic strategy, which is simply to beat 'em on price. "The key to our success is product and price positioning," says Dick Macedo, KMA executive vice president- marketing, who attributes the price advantage mostly to lower wage rates in Korea.

Leading off this new product assault is the Spectra, a new Sephia-based 4-door hatchback styled to look like a sedan. Geared toward young, male buyers on a tight budget, the Spectra adds a sport accent to the Sephia basics, which include a 1.8L twin-cam 125-hp engine and Getrag 5-speed manual gearbox or optional 4-speed automatic ($975).

The Spectra, about the size of a Honda Civic or Ford Focus but built on a slightly shorter wheelbase, undercuts those two cars in price by $1,500 or more. Base GS models will start at $10,795, with the sportier GSX checking in at $12,995 (neither including a $450 destination charge). A 4-door Civic starts at $12,885 and a Focus bases at $12,220.

Standard features include a split-folding (60/40) rear seat that translates into 11.6 cu.-ft. (328L) of cargo room, AM/FM cassette, tinted glass, tachometer and 2-speed wipers. The GSX adds sport alloy wheels, front and rear air dams, body-side skirts, rear spoiler, air conditioning, power windows and locks and leather-wrapped steering wheel.

The fully independent suspension was tuned by Lotus Engineering. And it provides a competitive ride and competent handling for a car of its class. Power also is adequate, given its price point, but the 1.8L doesn't deliver a lot of low-end torque (108 lb.-ft. [146 Nm] at 4,500 rpm) and even in fifth gear the 4-cyl. can be heard working hard to maintain highway cruising speeds.

The interior is cleanly laid out, with easy-to-read gauges, handy controls and enough storage pockets and cupholders to satisfy most. Seats are comfortable, with the driver's chair featuring a manual lumbar support. Some of the materials used - the center console is one example - aren't as high quality in appearance as those of many of Spectra's more expensive competitors, however.

Spectra buyers are expected to be single, childless, range in age from 18-35 and have a median income of less than $50,000. More importantly, KMA believes men will buy 62% of Spectras sold. That runs counter to the small car segment in general, which tends to appeal more to women. In all, KMA is looking to sell 16,000 units per year, about 60% the base GS model. Initial allotments will be designated '00 models, but '01s will go into production in Korea - with little change - in July.

The Spectra, on sale in Korea as the Shuma for about a year, almost didn't make it to the U.S., where buyers have been cool to hatchbacks. "Our own marketing guys told us nobody buys hatches," says Mr. Macedo. But the car drew a favorable response in consumer clinics, and KMA executives decided to go with their guts.

Like all good gamblers, Mr. Macedo and staff know how to ride a winning streak.

David Zoia is editorial director of Ward's Automotive Reports.