DETROIT (AFP)--Korean automakers have managed to increase their
share of the U.S. market amid a painful recession thanks to a
winning combination of marketing, pricing and solid products,
analysts said.
Once bit players in the crowded U.S. market who were plagued by
a reputation for poor quality, Hyundai Motor Co. (HYMLY) and Kia
Motors Corp. (000270.SE) have been steadily increasing their share
for years now.
But in the nine months since U.S. auto sales collapsed in
October amid a credit crunch and financial market meltdown they
have nearly doubled their share even as their total sales numbers
have fallen.
Hyundai's share of the U.S. market has grown from 2.5% in
October to 4.4% in June while Kia's share rose from 1.8% to 3.1%,
according to Autodata.
While they still trail the Detroit Three and most Japanese
automakers, Hyundai and Kia sell more vehicles than top European
brands like Volkswagen, BMW and Mercedes.
The showing is particularly impressive considering that the
Korean manufacturers, unlike their Japanese rivals, have steered
clear of the pickup truck segment, which accounts for one of every
six vehicles sold in the U.S.
And it could be hard for their competitors to win back that lost
share because Hyundai and Kia have posted significantly smaller
drops in sales, said Alan Baum of the forecasting firm the Planning
Edge.
The top six selling U.S. automakers - General Motors Corp. (GM),
Toyota Motor Corp. (TM), Ford Motor Co. (F), Honda Motor Co. (HMC),
Chrysler Group LLC and Nissan Motor Co. (NSANY) - all saw sales
fall by between 32% and 45% in the first six months of the
2009.
Hyundai's sales, however, were only down 10.8% while Kia's
losses were limited to 5.9%.
"They've obviously done better and they've picked up new
segments and their quality has improved," Baum said.
"They've also developed a strong marketing approach."
Hyundai made headlines early in the downturn with a program that
promised to cover most costs if people were forced to return their
cars because they lost their job.
It launched a new incentive this week offering new car buyers a
year's worth of cut-rate $1.49 a gallon gasoline with a program
that reimburses them for the cost of the different price at the
pump.
"They have clearly decided to keep the pressure on incentives,"
said Stephanie Brinley, an analyst with AutoPacific.
"But they're also getting some pretty good buzz with their new
products such as the Genesis and the Soul, which is helping
sales."
The Hyundai Genesis luxury sedan walked off with honors in
January as the North American Car of The Year the Detroit auto
show.
Kia's two new small vehicles, the Soul and the Forte, have
gotten excellent reviews.
"Soul continues to exceed our initial sales expectations and has
attracted new customers to our showrooms," said Michael Sprague,
Kia vice president of marketing.
Hyundai also made a strong showing in a closely watched survey
on initial quality by JD Power and Associates, winning the top spot
among non-premium nameplate and the fourth rank overall.
Kia ranked ahead of Volkswagen, Audi, Scion, Volvo, Subaru and
Jeep in the survey.
"The Koreans also have dealt head on with the quality issues
that dogged them," said Dave Sargent, vice president of automotive
research at JD Power.
Hyundai and Kia's success hasn't come only at the expense of
Chrysler and GM, which were forced to bankruptcy protection and
billions in emergency government loans when they ran out of cash
amid the sales slump.
Thomas Loveless, vice president of sales at Kia, said in a
recent interview that the Forte and Soul are both designed and
marketed to take away sales from established Japanese brands such
as Toyota and Honda.
"We see them as competition for Toyota and Honda," he said.
The one drawback for the Koreans is the very crowded nature of
the U.S. market, said Baum.
"Everybody has to fight for every scrap of market share," he
said.