LOS ANGELES - In the first concrete cooperation between the U.S. operations of Hyundai Motor Co. and its wholly owned subsidiary, Kia Motors Corp., the two automakers agreed last week to combine parts operations in certain regions.
Kia has no parts distribution center in the Midwest, so it will borrow a chunk of Hyundai's Aurora, Ill., depot to service 126 dealers beginning April 2.
The same goes for Hyundai's lack of coverage in the Southeast, where it will use Kia's Atlanta center to supply 102 dealers. The parts will be stocked separately within the depots.
Jim Richert, Kia Motors America vice president of parts and consumer affairs, said there will be no layoffs involved in combining the operations. In fact, both companies likely will hire additional people to staff the new offices.
Richert estimated the cost savings at 'hundreds of thousands of dollars per year' each for Kia and Hyundai.
'We won't be paying facility costs to rent a new place, and we'll save costs by shipping shorter distances to our respective dealers,' he said.
The move is necessary because both automakers are growing rapidly in the U.S. market. Hyundai sales increased 48.8 percent to a record 244,391 units in 2000, and sales through February of this year were up 40.9 percent. Kia sales grew 19.3 percent to a record 160,606 units in 2000, and sales through February were up 28.9 percent.
The automakers' actual parts operations will not be combined, however, because the companies have distinct parts catalogs, policies and operating procedures with dealers, Richert said.
The only policy they have in common is a pledge of next-day delivery of parts; Kia has a 96 percent success rate, Richert said. Both companies also offer Internet ordering of parts.
Although a spokesman called the agreement a 'one-off event,' this move may not be the last combination of Hyundai and Kia operations.
Hyundai Motor America President Finbarr O'Neill said in January that the automakers may combine finance operations. Hyundai has its own captive: Kia works through Primus.