SONOMA, Calif. - After more than six years as a two-product company, Kia Motors America Inc. has unleashed a product barrage aimed at taking it to 230,000 sales in 2001.
'We had two cars and they were getting old. Now we have three new products in one year, and we have to worry about how to spend our money and be focused,' B.M. Ahn, president of Kia Motors America, said at the media introduction here of the new Optima sedan.
The old products are the Sephia compact sedan and the Sportage mini sport-utility, which have done well enough to put the Korean automaker on the doorstep of a 1 percent U.S. market share for 2000, about 160,000 sales. A good chunk of Kia's growth this year - up 16.7 percent - has come from obtaining the same 10-year, 100,000-mile powertrain warranty as parent company Hyundai Motor.
'It has helped bump sales, and yet warranty costs are down. It's a great closing tool,' said Dick Macedo, Kia executive vice president of sales and marketing. 'We're transforming Kia from a price brand to a value brand.'
Joining the Sephia and Sportage earlier this year were the Sephia-based Spectra five-door hatchback and Rio subcompact sedan. The mid-sized Optima enters the lineup this month.
But Kia isn't stopping there.
Next May, a wagon version of the Rio arrives, followed shortly after by the Sedona minivan. Freshened versions of the Sephia and Spectra come in July. Lastly, coming in early 2002, is a Nissan Xterra-sized sport-utility built on a body-on-frame platform, Macedo said.
Ahn also wants to bring in a full-sized sedan larger than the Korean-market Enterprise luxury sedan, as well as a pickup.
But small players trying to do too much too soon can trip. In the early 1990s, Mazda tried launching six new products in 18 months and failed miserably because it lacked the financial muscle to get name recognition with consumers.
Macedo and Ahn already admit to some teething problems with the product proliferation.
The Optima launch is hindered by lack of V-6 availability, Macedo said. Most engines at launch will be inline-fours, a situation that won't be remedied until April or May.
Similarly, Ahn said he expects many Spectra sales to come at the expense of the Sephia. And profits on the Rio, which is priced under $10,000, are slim, which makes it hard to justify a lot of marketing spending.
All these new products mean Kia will boost its advertising budget considerably next year, although a final 2001 budget still is being hammered out with the parent company, Macedo said. Kia will spend about $120 million on ads in 2000.
Said Ahn: 'We have to study very carefully how to market. Next year, we will focus on Optima, Rio and Sedona, but we must continue to keep some focus on Sephia and Sportage.'
Auto industry analyst Wes Brown of Nextrend in Thousand Oaks, Calif., believes Kia is being 'too optimistic' with its sales goal.
'That's a lofty goal to have. Their image is improving, but the market is slowing down. It's the entry-level people who get hit by the slowdown first, and those are the consumers who buy Kias,' Brown said.
In fact, even with the slate of new products, Kia is unlikely to break 200,000 units next year, according to Nextrend forecasts.
But Kia intends to heavily promote its lineup with new advertising tactics to improve consumer awareness.
In the past, Kia has limited its exposure to cable and spot network TV, as well as print ads solely in car magazines. In 2001, Kia intends to have a presence on national TV shows such as 'Walker, Texas Ranger' and 'NYPD Blue,' Macedo said. A foray into mainstream magazines, such as the newsweeklies, also is being considered.
The new ad tag line: 'Darn good cars with a darn good warranty.'
Said Macedo: 'We have a lot more information to get out to consumers, so we need to have more print ads. The money adds up when you do three launches next year on top of four core products that we have to keep spending on.'
Kia has about all the dealers it needs, at 610. It looks to increase its total count to about 640 next year, but Macedo said he is trying to thin the ranks of stores that sell fewer than 10 cars a month.
'We have some guys who sell two, three cars a month,' Macedo said. 'They can't be making any money at it.'