Tuesday, January 03, 2006
Korean automakers improve quality
Korean automakers improve quality Perception in U.S. is still that Kia and Hyundai are affordable but poorly made. By Rick Popely Special to The Morning Call After test-driving a Honda Civic, Michael Gurin bought a 2006 Hyundai Sonata because of its roomier rear seat, additional safety features and lower price. Including discounts from the dealer, Gurin paid $16,000 for the midsize Sonata, some $2,000 less than the price he was quoted for the Civic, a compact sedan. Hyundai, once a car that cash-strapped consumers bought as a last resort, now competes with Japanese brands renowned for their quality. Fellow Korean brand Kia also is wooing customers from the Japanese, and both are attracting the young buyers the auto industry covets because they will buy several more cars in their lifetimes. ''The Japanese are starting to get worried about the Korean brands for the same reasons the domestics worried about the Japanese,'' said Art Spinella, president of CNW Marketing Research. ''The Japanese are looking over their shoulders right now. ''A recent J.D. Power survey of 34,000 new-vehicle buyers this year concluded that fewer people feel compelled to ''buy American'' and more accept Korean brands. CNW says the median age of Hyundai buyers is 30 and for Kia it is 28, the youngest in the industry. The average age of Honda and Toyota buyers is 42 and the industry average is 45. Spinella says price remains a key attraction for Hyundai and Kia, but they also click with consumers by offering more standard features than rivals. And there's that 10-year/100,000-mile powertrain warranty when most automakers limit theirs to three years/36,000 miles. The Sonata, for example, has standard stability control, traction control and side-curtain air bags, features that are optional or not available on some rivals. Besides, Sonata and the other Korean vehicles are ''not my father's Camry,'' Spinella says, meaning that young buyers typically reject what their parents drove. Spinella says the Koreans attract buyers from Japanese brands more than domestic brands because those are the ones they target. Hyundai, for example, compares the Sonata to the Camry in its marketing. Owners of domestic vehicles tend to shop domestic brands first. ''It's a cultural shift,'' said Dennis Galbraith, a Power senior director. ''The idea that people only want to buy American is going away. ''Hyundai, which marks its 20th year in the United States in 2006, started in the United States with the $4,995 Excel subcompact. The rock-bottom price enabled Hyundai to sell 168,882 cars in 1986, a record for an import brand in its first year in the United States. Shabby quality, however, damaged the company's reputation, and sales fell to 90,217 by 1998. Sales have more than quadrupled since to 418,615 last year and are up 8 percent this year, putting Hyundai ahead of Pontiac, 411,991 to 401,518 through November. Hyundai, now the fourth-largest import brand behind the Japanese Big Three of Toyota, Honda and Nissan, expects to sell close to 500,000 next year and reach 1 million by 2010. Toyota, the No. 1 import brand, will sell about 1.75 million this year. Fueling that optimism is that Hyundai is following the same path as the Japanese Big Three: Gain a foothold with inexpensive cars and then grow market share with broader lineups that appeal to a bigger audience. Hyundai has seven models now and plans ''a minimum of 12'' in a few years, said John Krafcik, vice president of product development and strategic planning for Hyundai Motor America. Among the new models will be the Entourage minivan in 2006 and a sport-utility vehicle due early in 2007 that will be larger than the midsize Santa Fe, which also will grow to hold seven passengers instead of five. ''We don't have a vehicle with three rows of seats now, and we know we're losing big chunks of customers because of that,'' Krafcik said. ''But next year, we'll have three . ''The Power Information Network, the data-gathering unit of J.D. Power and Associates, says that half of those who traded a Hyundai this year bought another Hyundai. That ranks Hyundai fourth in loyalty among all brands, behind Honda, Toyota and Lexus. ''They [other brands] have the advantage of full product lines. If someone wants to move up to a pickup or large SUV, Toyota and Chevrolet have them,'' Krafcik said, predicting Hyundai's loyalty will grow with its lineup. ''We've been primarily a sedanmaker, so we don't have that advantage yet. ''Hyundai and Kia have talked about offering a pickup, though neither has announced plans to do so. Kia's sales have more than tripled since 1998, to 270,000 last year, and are up 3 percent this year. Hyundai owns a controlling interest in Kia, and the two share some models, though with different styling. Despite their recent success, both suffer from earlier quality lapses, says Chris Denove, a partner in J.D. Power. ''Without question, Hyundai and Kia are two of the most improved brands as far as quality,'' Denove said. ''Unfortunately, consumer perception has lagged behind, so that many consumers still don't shop those brands because they don't think the quality has improved. ''It takes a long time for consumers to realize that improvements have been made.'' As recently as 2001, Hyundai ranked 29th among 36 brands in Power's initial-quality study and Kia ranked last. In this year's study, which measures problems in the first 90 days of ownership, Hyundai ranked 11th, ahead of Honda and Nissan. In 2004, Consumer Reports magazine named the Sonata the most reliable vehicle of that model year. Kia ranked 30th in Power's Initial Quality Survey this year, and owners still report more problems than the industry average (140 per 100 vehicles versus 118). The questions range from mechanical issues, such as how difficult the car is to start, to the amount of wind noise in the cabin. Kia began selling cars in the United States in 1993 and aims to sell 500,000 vehicles per year by 2010, adding four or five vehicles to its current lineup of seven. Rick Popely is a reporter for the Chicago Tribune, a Tribune Publishing newspaper. Source:mcall.com Always remember to visit for latest deals available Gary Rome Hyundai , Hyundai Accessory Store and Hyundai Performance Auto Parts.