Tuesday, June 23, 2009

What Detroit sees in the rear-view mirror

Or should I say, "back mirror"?

According to the New York Times, Kia and Hyundai are leading the pack of smaller automakers that are benefiting from Detroit's woes, and it's not just because of lower price but greater attention paid by American consumers to quality. An excerpt:
In addition to the recession, and the bankruptcies of Chrysler and General Motors, a new threat has appeared in the rearview mirror.

Many smaller automakers are gaining a bigger share of the market, most notably Hyundai and Kia.

Together, the two Korean brands, which are both owned by Hyundai, hold 7.3 percent of the American market, the same as Nissan, which ranks sixth in American sales, behind G.M., Toyota, Ford, Honda and Chrysler. Last year, Hyundai and Kia had 5 percent of the market.

Their gains appear to be a replay of what occurred four decades ago, when upstart automakers from Japan started selling cars in the United States. At the time, American carmakers dismissed them, but today they control nearly 40 percent of the American car market.

Analysts see two main reasons that smaller companies are capitalizing on the auto industry’s downturn. One is that the shrinking of the overall market — the current selling rate is about 10 million vehicles a year, down 40 percent from two years ago — has created opportunities for carmakers that do not need to sell millions of cars to make money.

“You can be profitable at a much smaller market size, selling to much fewer numbers of people,” said Ron Pinelli, president of Autodata, which tracks industry statistics.

Second, he said, buyers have become much less focused on brands and more on the quality of the vehicles themselves.

“There are so many good cars out there to choose from. Everybody’s building a good car right now,” Mr. Pinelli said. “The average person who punches out of work and picks up some fast food and goes home to watch reality TV is oblivious to which auto brands are owned by which corporation.”

Hyundai, in particular, has struck a nerve with its Hyundai Assurance plan, which allows buyers who finance their vehicles to return them if they lose their jobs. Other auto companies have adopted variations on the plan.

Hyundai has also received an image boost from its luxury Genesis model, which was named the North American car of the year at the 2009 Detroit Auto Show.
Indeed, here in the US, Kia America has been running commercials focusing on its 15th anniversary in the United States, emphasizing that it sells more cars now than a number of "established" brands, including Lexus, Volkswagen, etc. Basically, making it sound legit to own a Kia (to counter the "killed in action" crap).

Your mission, should you choose to accept it, is to guess how the usual suspects in the K-blog commentariat will dismiss this. Will it be an accusation of a pay-off? Will it be that Korean cars have a lot of Japanese parts? Will it be that after the economy returns to normal, Americans will go back to buying gas guzzlers, leaving Hyundai and Kia with egg on their face?

1 comment:

  1. They can donate all the unsold cars to Cars4Charities Car Donation Center at www.cars4charities.org


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