Kia Putting Dealership Expansion in Midwest on Hold
Kia Motors Corp.’s U.S. unit in Irvine said Monday it will delay opening about 30 dealerships in the Midwest because of regional staff shortages, slowing the South Korean auto maker’s effort to step up its U.S. marketing.
The dealerships in Michigan, Wisconsin and Minnesota won’t open until December instead of August and September as planned, a spokeswoman said. The company blamed a lack of employees in sales, service and parts management rather than a shortage of autos or the insolvency of its parent company.
Kia, South Korea’s third-largest auto maker, is up for auction after collapsing last year under almost $10 billion in debt. It’s looking to the U.S., its leading export market, to offset stagnant sales in recession-bound South Korea.
Even if the decision wasn’t deliberate, “it makes good business sense to slow their expansion plans a bit,” said James Hall, a consultant with AutoPacific Group in Southfield, Mich.
The central U.S. is one of the last regions where Kia is setting up dealers, and it doesn’t yet have enough employees to serve as liaisons between them and the auto maker, said Gino Effler, a Kia spokesman. “If we’re going to open these dealerships, we want to do it right,” he said.
Kia said it still plans to have 500 dealerships in the contiguous 48 states by the end of the year and is studying the possibility of dealerships in Canada.
Kia makes the Sephia sedan and Sportage sport-utility vehicle. It started selling cars in Oregon in 1993 and has 428 dealerships in 42 states.
The auto maker has a 0.5% share of the U.S. market, compared with South Korean rival Hyundai Motor Co.’s 0.6%. Thanks partly to more dealerships, Kia sales rose 97% to 50,616 vehicles through July from the year-ago period. Hyundai sales fell 6.2% in that period to 57,847.
The problems of Kia’s parent so far haven’t hurt U.S. sales, the U.S. unit said. Company research shows that less than 2% of Kia customers are aware of the parent company’s financial troubles.
General Motors Corp., Ford Motor Co., Hyundai, Daewoo Motor Co. and Samsung Motor Inc. have submitted letters of intent to bid for Kia Motors. The companies have until Friday to make an official bid.
