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Rise of the Korean Carmakers: Kia and Hyundai in the USA

JoeWirija

rise of korean cars

The United States is among the world’s top and most important automotive markets. Why? There’s a number that can answer that: 227.5 million. According to Statista.com evidence, as of 2018 there were 227.5 million licensed drivers in the US. This represents an enormous single market in which an enterprising car company could take hold.

America is not short of carmakers — names like Ford, Buick, Chevrolet, GMC, Cadillac, Tesla and many more are never far from people’s minds when they think of cars in general — but its domestic brands have to also share their market place with international marques. Two of the most prominent hail from tiny South Korea. Their country may be small, but their names are mighty: Kia and Hyundai.

Kia and Hyundai: Cousins Trying to Make It Big in America

Kia and Hyundai broke into American market in 1993 and 1986 respectively. Kia entered with the 1993 Sephia and Sportage models, whereas Hyundai had their Excel model. Hyundai in particular enjoyed early success as they found a significant vein of customers priced out by increasingly luxurious models from other brands and in need of something affordable and reliable.

Kia’s first several years in the US and in the 1990s worldwide were marred by various struggles, and the company was even going bankrupt by 1997. Luckily for them, this was the moment in which another Korean company — you guessed it, Hyundai — stepped into to buy a controlling share of Kia. To this day, Hyundai remains the parent organization of Kia with a 33.88% share in the company. Equally, Kia is part owner of many of Hyundai’s other subsidiaries with varying equity stakes. This is how the two plucky Korean challenger companies ended up becoming family.

Family Rivals

Despite their corporate ties, there’s no fervor lost in the rivalry between the Kia and Hyundai brands. From an American perspective, it’s easiest to think of it as something similar to what happened within Apple with the near-antagonistic rivalry of the Apple II team and the Macintosh team. They’re all technically on the same side, but neither can stand to see the other winning in their own little “civil war.”

This conflict has brought great things to the American consumer, however, in the form of affordable, stylish and reliable cars. The most recent accolades for Kia came in the wake of the phenomenal success of their 2020 Telluride SUV, which won awards from the Kelley Blue Book, MotorTrend and others. In fact, in 2020 it was crowned “World Car of the Year,” beating out offerings from many automotive giants from around the world. In the same year, the Kia Soul EV also won the title of “World Urban Car.”

The Telluride and its accolades are particularly pertinent to today’s article, since this model was designed and built in America (West Point, GA) exclusively for the US market. This is a Kia that you can’t even get in the Kia homeland, South Korea!

Hyundai is yet to win in a category in the World Car of the Year competition, but it has already been nominated many times, including (but not limited to) nominations for its Sonata Hybrid (2011), the Hyundai Veloster (2012), the Genesis (2015), the Ioniq (2017) and the Nexo (2019).

Growing Sales – Should the American Brands Be Worried?

Half a century ago or more, it was almost unthinkable that non-American brands would so dominate in the US market. Those were times, however, where much of America’s automotive competition was still emerging from the shadows of war, recession and other crises. As Germany, Japan and France rose to challenge this US domestic dominance, the wind started to shift. By the late 80s and 1990s, these two Korean brands were also in play, and are now doing better than ever.

It was reported in The Korea Herald that sales of Hyundai and Kia cars in the US had increased by 4.6 percent in 2019 thanks to a surge in demand for SUVs and crossovers. The specifics showed that the two companies together had sold 1,304,109 vehicles in total, up from 1,257,307 in 2018. One thing to note here is that these figures do also include the sales of Genesis-brand cars, which is the luxury wing of Hyundai — in a similar way that Lexus is the luxury wing of Toyota.

Of the two, Hyundai cars are selling the best, with 710,044 units in 2019, 50 percent of which were for SUV models. Kia is not far behind, however, on 615,338. The SUV is often thought of as quite a uniquely American vehicle, if American automakers like Jeep can’t stave off competition from relative newcomers to the field, then they should indeed be worried.

Other Factors of Kia and Hyundai’s Success

There are numerous other causes that help to explain the success of Kia and Hyundai in the United States, and also why American automakers should indeed be worried enough to take decisive action to compete.

  • You get more for less. Take the Hyundai Sonata, for example, which at the top trim level with luxurious Nappa leather, heated seats and more fantastic features comes in for a not-so-princely sum under $40,000 and starting at just $22,000. Can the same be said of the Chrysler 300 which starts at $30,000?
  • They give amazing warranties. It was back in 1998 when Hyundai offered the first 10-year/100,000-mile warranty for the powertrain, and Kia wasn’t too far behind — they were corporate relatives by then, so that’s hardly surprising — with a 5-year/60,000-mile warranty bumper to bumper.
  • They embrace the EV revolution. While American makers are now getting behind the move to electric models, it seems that Asian makers from South Korea and Japan have long seen the potential. The result now is that Hyundai and Kia offer customers more electric and hybrid choice.
  • There have been huge leaps forward in styling. Some automakers dismissed Korean —and before that, Japanese — car makers as unable to demonstrate sufficient design flair to compete with American brands. In the globalized world however, international talent is fluid and designers pop up all over the place having learned from others in some far-flung land. Clearly, Hyundai and Kia have been working hard on their designs, now creating stunning, contemporary and unique models with fantastic appeal.

Conclusion:

The rise of Korean automakers Kia and Hyundai has been nothing short of meteoric in the United States, but the truth is that while American carmakers have to buck up their ideas, they don’t truly have anything to fear. If anything, the key to the success of Kia and Hyundai is that they are embodying the American spirit of creativity and innovation. If US automakers find a way to re-embrace this inheritance, then they too can continue to compete in a changing automotive landscape.

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