Subaru peaks out

You've got to hand it to Subaru for not simply dominating a corner of a market, but actually creating the niche. Subaru single-handedly transformed the station wagon from nerdy, wood-paneled, family-toting suburban cruiser to an active, all-wheel-drive (AWD), bicycle-toting mountain scaler.

New for 2000, Subaru rolls out updated versions of the simply dominant Outback and Legacy. Both vehicles come in sedan and wagon variants, sport a 2.5L boxer 4-cyl. engine and the signature AWD. They have led the carmaker to 45% growth since 1993.

But Subaru has seen the top of the mountain. The very niche that catapulted the automaker to its peak has ensured the sky won't be the limit. There are only so many people willing to consciously snub the sport/utility vehicle craze for a $25,000 wagon, and those who collectively fit the niche have proved to be a finite number.

Subaru's big chance: once again finding the next niche and be there waiting when the customers arrive. Subaru's formula has done wonders for its once-flailing fortunes, but it appears that without trucks or full-blown SUVs to expand volume, the growth days are numbered. o - Katherine Zachary

The Kia Sportage sport/utility vehicle points to all the reasons why the Korean automakers' U.S. sales figures recently hit a 12-year high. It holds appeal to price-conscious consumers who want point A-to-point-B transportation in a decent, compact package. Though the Koreans - Hyundai Motor Co. Ltd., its Kia unit and Daewoo Motor Co. Ltd. - currently hold a paltry 1.7% of the U.S. market combined, they're hardly going away.

The Korean Big Three is placing its collective bet on the SUV. Hyundai next year will introduce its first SUV, the Santa Fe, while Kia plans to debut its Sedona minivan. Daewoo is adding a small, two-door SUV, the Korando, to its '00 offerings, while the four-door Musso will debut by early 2001.

If they want a bigger slice, product mix is just one worry. They also must divert skeptical American buyers from adding "Korean" to "inexpensive" and coming up with "cheap."

Kia, which last year almost met bankruptcy before a Hyundai bailout, helped put itself on the map by tacking on 190 dealers this year and upping its advertising budget by 40%.

On the other hand, Hyundai, the first to dive into U.S. waters in 1985, has failed to generate many waves, despite aggressively expanding its dealer network and doubling its ad budget. Look to see Hyundai leverage Kia's charm and go for a more integrated approach in future efforts.

Daewoo brought its wares to North America last year, falling dramatically short of target sales, partially due to a major marketing misjudgment. The automaker targeted college kids as its primary buyers, and, even worse, hired other college kids to do on-campus selling. An unmitigated flop, Daewoo is regrouping and pursuing the tried-and-true dealership method and ultimately would like to see annual sales of 150,000.

One look at Daewoo's situation back in Korea shows the company will be lucky to have any future sales whatsoever. Like Kia before it, Daewoo courted bankruptcy this summer and is now chatting with General Motors Corp. A GM buyout may be Daewoo's only chance for limited success.