Hyundai-Kia's U.S. cooperation and competition: It's all in the family

Ryan Beene is a Los Angeles-based reporter for Automotive News
ATLANTA -- The Hyundai-Kia group's decision to build the Hyundai Santa Fe crossover at Kia's plant in Georgia is one that highlights the unique nature of how the Korean corporate cousins compete in the U.S.

No official joint venture was announced. And both Kia and Hyundai were unwilling to share details -- including about financial arrangements and production volume -- when I visited the plant on a press trip Tuesday.

But moves like this production arrangement happen under the direction of management at the brands' parent companies in South Korea.

It works because the Kia Sorento and Hyundai Santa Fe share the same platform and many of the same suppliers.

For Kia, the move means more of the plant's 300,000 units worth of annual capacity can be used by putting the Santa Fe on a second line. For Hyundai, the move frees space at its plant in Alabama to take advantage of the current sales momentum of the Sonata sedan.

The companies share many of the same suppliers, and Hyundai suppliers have been setting up shop at a supplier park near the Kia plant to service Santa Fe production. Also, only about 80 miles separate the two companies U.S. plants -- a very reasonable trip to ship parts, tooling and other materials needed for production.

But the two companies are dire competitors in the U.S. They compete in many of the same segments, with product offerings that still share many similarities despite efforts to grow more distinct.

It's a friendly rivalry, likened to me as similar to competition between brothers -- you always want your brother to do well, but you still want to beat him. Counterparts at each company, like Kia's U.S. sales boss Tom Loveless and Hyundai's Dave Zuchowski, don't talk strategy with each other. This is partly because of antitrust issues, or so I'm told. It's also because neither wants to tip his hand too much to the other.

As both companies enhance their own competitive position to capitalize on their sales momentum and introduce new vehicles in the U.S., it'll be interesting to see whether any other unique arrangements develop.

Stay tuned.

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