Underdog GM Korea Issues Minicar Challenge to Kia

When GM Korea held a preorder sales event for the all-new Chevrolet Spark in Seoul on July 1, sales vice president Marc Comeau vowed the minicar will reclaim the No.1 domestic sales position its predecessor Matiz version lost in 2008.

Those were seen as fighting words by Kia, whose Morning minicar has a 52% share of the A-segment in the Korean market, compred with the Spark’s 32% share. The remaining 16% is claimed mostly by Kia’s Ray small car.

The home market has been key to keeping the Morning and its export version, the Picanto, ahead of the Spark on a global basis in the first six months of 2015.

In the January-June period global sales of the Morning/Picanto outpaced the Spark with 118,175 deliveries against the Spark’s 101,005. In the Korean home market, the Morning logged sales of 75,537 units, a nearly 3-to-1 advantage over the Spark’s 25,995.

On an export basis, however, the Spark far outsold the Morning/Picanto, selling 75,010 units to the Kia minicars’ 41,638.

 “We don’t have any particular comment on expected Spark sales and how they might pan out vis-à-vis Morning/Picanto sales,” a Kia spokesman tells WardsAuto. “But sales of Morning/Picanto are indeed on track to meet or exceed this year’s target” of 240,000 vehicles. That would be about a 4% drop from the 250,953 units sold in 2014.

The Morning nameplate is used in Korea, Chile, Hong Kong, Taiwan and Vietnam. In all other markets it is sold as the Picanto.

The battle between the rivals for minicar supremacy is no tempest in a teapot.

The Spark is more than just a cute small car that has been carving out a sizeable niche for itself; it constitutes one-third of GM Korea’s current volumes and is vital to the automaker’s portfolio and its current and future business fortunes.

In January-June, the Spark’s 101,005 global sales accounted for 33% of GM Korea’s global total of 307,889. Its 25,995 domestic deliveries represented 36% of the automaker’s 71,364 sales. The Spark’s 75,010 export sales was 32% of all 236,522 CBU vehicles sold by GM Korea outside the country.

By comparison, the Kia Morning/Picanto’s ratio of the global, domestic and export sales of all vehicles built in Kia’s Korean plants is much lower.

The Morning/Picanto, while strategically important globally and anchored by its hold on the domestic market, sold 118,175 units globally in the first six months of 2015, accounting for 7% of the 1,706,002 global sales of vehicles produced in Kia’s domestic plants.

In the Korean market the Morning’s 75,537 sales accounted for 16% of the automaker’s domestic sales. Of Kia’s 1.24 million global deliveries, just 41,638 units, or 3.4%, were Morning/Picanto models.

GM Korea’s Matiz was the pacesetter in the Korean minicar market until 2008. That was the year the government changed its specifications on what constituted an A-segment city car that could qualify for sales-tariff discounts and other special benefits.

“When the government regulations on engine displacement for minicars was changed from 0.8L to 1.0L, the Kia Morning introduced the new (1.0L) powertrain while the Daewoo Matiz kept the previous (0.8L) one,” a GM Korea spokesman tells WardsAuto.

It was not until the new ’10 Matiz Creative version became available in late 2009 that GM Korea offered a 1.0L engine in Korea. Yet the lead of the Morning has held up.

Kia Morning (Picanto).

A Kia spokesman says effective marketing and the performance, fuel efficiency, safety features and attractive styling have enabled the Morning/Picanto to outsell the Matiz Creative.

“We have been No.1 since well before the original Spark was launched and have been No.1 ever since,” he says.

The ’16 Spark’s domestic sales launch in August will mark the beginning of a new offensive in GM Korea’s struggle with Kia, both at home and abroad. (No date has been given for the start of export sales, other than in the second half of 2015.)

It is the minicar’s first complete redesign since the predecessor Matiz Creative’s introduction more than five years ago.

At the July 1 prelaunch event in Seoul GM Korea CEO Sergio Rocha called it by its home-market name Next Spark. A spokesman notes it is a “pet name” developed to help sell the new vehicle in Korea.

Rocha said the ’16 Spark will “accelerate our business in the country and further leverage the role of GM Korea with the GM global business.”

The minicar is being touted under the slogan, “Life is Full of Spark.” Some pundits see it as Rocha’s marketing team subtly spoofing Kia’s worldwide “The Power to Surprise” slogan.

“One could decipher their slogan that way, but I don’t personally fully agree that it is a jab at our slogan,” a Kia spokesman says. “Our focus is not on trying to surprise GM Korea but to continue to offer A-segment customers the best choice on the market for a small, economical, fuel-efficient, safe and fun-to-drive car.”

In Korea the Spark comes with an all-new 1.0L 3-cyl. Ecotec engine that develops 76 hp, while in the U.S. and other major export markets it also is available in 1.2L versions.

The new Spark features a lower profile and streamlined, aerodynamic body. It’s available for the first time with advanced active-safety features that include forward-collision alert, lane-departure warning and blindspot detection.

It also offers for the first time Android Auto connectivity, along with the latest Chevrolet MyLink infotainment system with 7-in. color touchscreen.

Kia’s Counterpunch

The Kia spokesman concedes the Morning/Picanto does not offer a few of the high-tech convenience and safety features available on the new Spark, but says it has plenty of its own and more will be coming.

“The current model has a rearview camera but does not have collision-avoidance system or Android Auto, but these and more are being considered for the next-generation model,” he says.

At investor presentations held last month in Hong Kong and Singapore, Kia disclosed the all-new model Morning will launch in Korea sometime in 2016, along with new models of the automaker’s K5 plug-in hybrid electric vehicle, K7 and K7 PHEV. (The K5 and K7 are marketed in the U.S. as the Optima and Cadenza, respectively.)

The presentations did not indicate the all-new model will be available in any export markets in 2016.

The Picanto’s top four export markets for 2014 were the U.K. (16,750), Algeria (13,900), Israel (12,840) and Colombia (11,547). Sales in Western Europe totaled 51,102 units.

In 2014 GM Korea’s Spark export sales did best in the U.S. (40,044), followed by Mexico (31,059).

Security analysts, as well as officials at GM Korea, are expecting Kia to spring a plethora of new advertising and marketing tactics to dampen the anticipated early success of the new Spark, which received more than 1,000 preorders in the two days following the July 1 presales launch.

Kia and its advertising and marketing agencies are well aware an all-new model such as the ’16 Spark draws greater consumer interest than a refreshed one nearing the end of its cycle, such as the Morning/Picanto.

There has been speculation among analysts Kia will slash prices on the Morning/Picanto to hold its position in the various markets. A Kia spokesman says the only incentives currently being offered are in the Korean market: 3-year financing at 1.9%, or 760,000 won ($680) cash discounts.