Home / Auto News / News article: Hyundai-Kia "Rivalry" Could Hinder Growth - AutoGuide.com News
 |  Feb 06 2012, 5:45 PM

In the auto business, 2011 proved to be the year of the Koreans; both Hyundai and affiliate Kia sold a record number of vehicles, while their shares outperformed those of other automakers, including the likes of heavyweights such as General Motors, Toyota and Volkswagen.

That said, some of the sales in new vehicles from the Koreans actually cannibalized others within their ranks, notably the Kia Optima (K5 in South Korea), which after its latest redesign saw orders triple, though some of that came at the expense of Hyundai’s Sonata, which only saw demand increase by some 5.2 percent in the same period.

There’s every chance the same thing could happen again with Kia planning to launch the more upmarket K9, designed to go after the same customers as the Hyundai’s Genesis and Equus.

Frank Ahrens, a spokesman for Hyundai said the car-to-car rivalry between the two brands extends to all segments. Further complicating matters is the fact that although Hyundai and Kia are overseen by the same chairman (Chung Mong Koo) and share a development center, they are run as two separate companies and arch rivals at that.

There’s no question that Hyundai’s original 51 percent purchase of Kia Motors back in 1998 rejuvenated the brand and helped it grow into a purveyor of world-class vehicles with competitive prices. All the same, the companies need to sort out their differences now more than ever because it seems global competition is going to intensify in 2012 especially with Honda and Toyota returning to pre-disaster capacity.

This will likely mean Hyundai and Kia will need to develop a successful alignment strategy for their respective product lines, for example: focusing one brand on premium products and the other on volume sales. In doing so, they stand a greater chance of stealing sales from Japanese, American and European rivals instead of each other.

It seems that signs of greater product differentiation between Hyundai and Kia’s offerings are afoot; Kia’s European COO, Paul Philpott, said during a recent interview that “Hyundai will become the mainstream brand with Kia [functioning as] the sportier, dynamic little brother.”

[Source: Bloomberg]