Focusing on S. Korean quality
The chief executives of Hyundai and Kia say the low-priced, South Korean-built cars coming next year to Chevrolet and Suzuki showrooms will bolster their claims that quality has improved.
“It’s certainly a vote of confidence for Korean products,” said Finbarr O’Neill, CEO of Hyundai Motor America.
“We welcome the competition. Their models will bring more focus on the entry-level segment,” O’Neill said.
Peter Butterfield, CEO of Kia Motors of America, called it “a continued acknowledgment that the Koreans are building good quality vehicles.” He shrugged off the competition.
“I’m not concerned about it,” he said. “The brands that build the cars they sell historically have been more successful than brands that re-badge vehicles.”
Early next year, Suzuki and Chevrolet will begin selling cars built in South Korea by General Motors Daewoo Auto & Technology. GMDAT was formed out of the defunct Daewoo Motor Co.
The Chevy Aveo and Suzuki Forenza and Verona are sold as Daewoos in other parts of the world.
Chevy will sell the subcompact Aveo in the U.S. and the compact Optra and mid-size Epica in Canada. Suzuki will sell the compact Forenza and mid-size Verona in the U.S. but won’t have an Aveo model.
Chevrolet and Suzuki will tout the high number of standard features and low prices of their South Korean-made cars, taking the same approach Hyundai and Kia have used.
Butterfield said Kia will continue to emphasize value and will add more safety features to differentiate their vehicles from other low-price models.
The entry-level Aveo is important, because Chevy has been without a low-cost model for two years, since it dropped the Metro produced in cooperation with Suzuki, said John Smith, group vice president of sales and marketing for General Motors.
“Without an entry-level car, there have been lots of people who saw no reason to shop a Chevy store,” so Chevrolet lost not only an entry-level sale but also a chance to move those shoppers into a Cavalier, he said.
Suzuki is targeting major Japanese brands with its new South Korean-made cars. The compact Forenza, a Euro-look sedan styled by Italian design firm Pininfarina, is aimed at Honda Civic or Toyota Corolla buyers and is priced at $12,000 to $15,000.
The mid-size Verona aims to undercut the Toyota Camry, Honda Accord and Nissan Altima with base sticker prices of $16,000 to $19,000. The front-wheel-drive Verona has a 2.5-liter inline 6-cylinder engine developed by Daewoo and Porsche.
Tom Carney, Suzuki’s U.S. marketing director, acknowledges the risks in taking on major brands such as Toyota and Honda. But he says: “We’ll give it a shot. Look at Kia and Hyundai. That’s who they targeted, and they’ve been very successful.”
Suzuki is best known in the U.S. for its small sport utility vehicles. It is better known its small cars in Japan, where it ranks fourth in sales behind Toyota, Honda and Nissan. The majority of its business in Japan is with cars smaller than the subcompact Aerio, its entry-level U.S. model.
Could a smaller car find its way to the U.S.? “I don’t rule that out,” said North American President Rick Suzuki, who is the grandson of the company founder.
Suzuki will redesign its Vitara and XL-7 SUVs in the next few years and add a car-based SUV. “We will continue to be strong in the small SUV area. It’s the bread-and-butter of our line,” he said.
While other carmakers struggle to discover which kinds of vehicles young buyers want, Kia’s Butterfield thinks he has it figured out.
“It’s really fairly simple. If you don’t offer a product they can afford, they won’t buy from you,” he said. Butterfield says the average age of Kia buyers is 37, among the lowest in the industry.
