Kia Says It Doesn’t Want to Make Cheap Cars Anymore, But High-End Efforts Could Break Its Back

Kia is announcing that it no longer wants to make cheap cars, but its efforts to move upmarket risk backfiring.

So far, Koreans have been able to sell more and more cars for more and more money. So they would like to continue in the same direction. But isn’t the current situation due to the fact that others have made it more expensive while reducing supply? Does Kia really expect people to like it more than BMW, for example?

As a Kia owner, I can’t stand the Korean manufacturer. It has come an amazing journey in the last two decades, after all, just imagine how the first generation Rio looked. Both the sedan and the station wagon benefited from an unattractive design and lacked impressive technology. So did his successor, who arrived in 2005. In fact, it took until the third generation for the general public to wake up. It is not surprising, however, that Peter Schreyer, who was already, among other things, the chief designer of the company, was the author of the original Audi TT.

Along with appearance, the Koreans also worked on technology, and the fringe brand gradually became an important player. Despite these developments, Kia has kept a low profile in terms of pricing. This logically generated greater interest. Today, the brand is one of the world’s largest automakers along with parent company Hyundai, and Koreans sold nearly 7 million cars worldwide last year. In addition to the low price, this is due to the fact that they were not affected by the shortage of equipment like other manufacturers, which is due, for example, to the continuation of the expected engines in the range.

However, Sean Yoon, CEO of the US division, hinted that Kia’s era as a budget brand was coming to an end. This is due to the changes that have taken place over the past five years, with private sales increasing by 31% and the average price up to 60%. “It is a very big step,” says Mr. Yoon, who adds that “Y and Z like us a lot. We are guaranteed a bright future, because until now, Generation X has been the main source of purchases, but the focus is now on the younger generations. »

Yoon adds that models like the Sportage, Seltos and Telluride have yet to reach their full potential, despite SUVs currently accounting for 80% of all US registrations. That is why Kia intends to increase the gear, which should be combined with its change to electric mobility. The director of the overseas division expects this development to be successful and that sales will not be affected. However, such thinking may not pay off for the brand, as its long-term consumer brand image is rooted in people.

The reason why sales are increasing, along with prices, is due to global changes affecting the entire automotive industry. All manufacturers have increased their prices, especially in the last three or four years, but they started at a higher level than the Koreans. Hence they remain affordable and thus the choice of a growing number of people, who can still choose from a wide range. For example, a Ceed like this is available with three-cylinder, four-cylinder and diesel engines, and in six trim levels.

Now try to go to a Skoda showroom, where you will meet the Scala, a hatchback that sets the standard. It is only available with one other engine, a one-liter three-cylinder. Its weakest version doesn’t even match the power of Kia’s base engine. But it is the Koreans who are the cheapest. So many buyers will decide to stick to the initial budget set according to the Skoda range and opt for higher equipment or a better engine. And at the end of the day, they will pay extra, because they just can.

It is this choice, however, that the Koreans would take away from them by going to the market. At that time, they would also find themselves in a market where they would be competing with brands like BMW. Of course, it’s like bringing a knife to a gunfight – image is always important, and only a few people will buy a Kia at the price of a BMW, even if it’s perfect. So the brand should stay where it is and build on the foundations of its current approach. There are many luxury products, but the number of people who can afford them is decreasing. There is a greater thirst for affordable consumer products, as demonstrated by Dacia, which will satisfy the new way of thinking of Koreans – it will have few rivals.

Source.

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