LOS ANGELES -- Kia's near-luxury Cadenza sedan -- priced from around $36,000 and equipped to swipe customers from the Acura TL and Lexus ES -- underscores how far the marque has come since its days as a value brand for used-car intenders.
Where it goes from here is less clear.
Kia hopes the sedan's high-tech features and upscale touches will keep its customers from defecting to other brands when they're ready to move upscale, and bring new, more affluent customers to Kia. The company forecasts annual Cadenza sales of 12,000 units, and Michael Sprague, executive vice president of marketing for Kia Motors America, wants the vast majority of them to be conquest sales.
"We standardized leather, we standardized navigation because we're going after people who are buying the high-end Tauruses, the high-end Avalons the high-end Chrysler 300s, the Acura TLs, the Lexus ES and the Lincoln MKZ," Sprague said. "That's where we see the opportunity."
But some analysts see a potential stumbling block there as well: the prospect that customers who are prepared to spend $35,000-plus for a car may want a premium marque to go with it.
The key is whether "Kia customers will be willing to pay more for a vehicle just to stay with the brand," says Jesse Toprak, analyst for TrueCar. "That's the No. 1 question."
Kia says the ground is fertile for it to move upscale. It cites an internal study showing that consumer awareness, familiarity, favorable opinion and consideration of Kia compared with all Asian brands are all up since 2009.
In 2009, the average Kia sold for $19,285 with $3,410 worth of incentives, according to data from TrueCar. Through April this year, Kia had rung up $22,896 per sale, with only $1,705 per unit in incentives.
The Cadenza, which began U.S. sales in April, had been waiting in the wings for more than three years. It went on sale in South Korea, where it's called the K7, in 2009. At the time, Kia was preparing to launch a redesigned and better-equipped Optima in the United States, to replace a frumpy mid-sized sedan with small-fry sales volume. The redesigned Optima went on sale in late 2010.
Sprague says Kia needed the Optima to be a hit before it could take another step upscale.
"We needed to establish ourselves in that mid-sized sedan segment," Sprague said in an interview. "For us to have brought out the Cadenza two years ago when it launched in Korea just didn't make sense."
The Optima's design and sales numbers have turned heads. The average Optima sold for $19,468 with $3,340 in incentives in 2009, compared with $25,477 with $2,047 in spiffs this year through April, according to TrueCar.
"We sold 25,000 in 2010 and 155,000 last year," Sprague says.
The Optima also has delivered for Kia's corporate bosses in their effort to sell better-equipped models with higher profit margins. Korean carmakers' profitability has been under pressure as the Korean won has strengthened against global currencies.
Kia's first-quarter earnings tumbled 35 percent, in part because of the won's gains and slower global sales caused by limitations on production capacity.