The traditional global automobile industry has two three-letter threats. One is Kia. The other is BYD. Kia, the other half of South Korea's Hyundai-Kia Automotive Group, poses an immediate threat. BYD, a China-based energy company aspiring to produce the world's most efficient and affordable electric cars, threatens to dominate the industry's future.
In this week's column, we'll focus on Kia, which in the course of a few years has become an impressive rival to Honda, Toyota, Nissan and other companies in the business of producing midsize family automobiles.
Consider, for example, the 2011 Kia Optima SX.
The Optima's debut in 2001 was greeted with a global yawn. The car was beyond dull. It was depressing in design, engineering and performance. Its attraction - to the extent there was any - lay in its low price.
Now, a decade later, the new Optima sedan is poised to take market share from every other manufacturer selling midsize family cars in America. That includes Volkswagen of Germany, which has mounted an expensive campaign to topple Toyota from its No. 1 spot as the world's biggest manufacturer and retailer of automobiles - a goal Volkswagen hopes to reach largely through the sale of midsize family sedans such as the Jetta and the Passat.
But Volkswagen will have to deal with Kia in climbing to the top of that commercial Mount Olympus. Dealing with Kia won't be easy.
Let's examine value for dollar, a category in which Kia beats Volkswagen and practically everyone else.
The base Kia Optima LX starts at $18,995. The top-of-the-line Optima SX, driven for this column, is priced at $25,995. For 2011, pricing for the base Jetta,a stripper if ever there was one, starts at $14,995. The top-notch diesel-powered Jetta TDI carries a manufacturer's suggested retail price of $22,995.
If value for dollar were based only on pricing, the Jetta would have an edge. But the "value" part of the pricing equation speaks to what you get for what you pay. In the 2011 Kia Optima, you get more.
The exterior and interior styling of the new Optima surpass what is offered on and in the 2011 Jetta. The Optima offers more standard equipment. The new Jetta TDI, for example, has a torsion-beam rear suspension, which is less favorable in vehicle handling. The new Optima SX offers as standard equipment a more sophisticated multi-link rear suspension, which greatly enhances handling.
In short, Volkswagen's strategy is to assuage consumer price sensitivity by removing content from its vehicles, which can be viewed as a common-sense approach in economically hard times. At Volkswagen, you pay for what you get, and what you get meets consumer expectations.
Kia may have a better idea. You pay a bit more. But what you get vastly exceeds consumer expectations. It is a favorable shock, one that elicited joy and surprise from nearly everyone who got behind the wheel of the Optima SX.
Ria Manglapus, who works with me on vehicle evaluations, was so happy that I was going to the North American International Auto Show in Detroit and leaving the Optima SX in her hands, she drove me to the airport.
"Wow!" she said. "What a car! I can't believe this is a Kia. Wow! Wow!"
No one expressed that kind of joy over the 2011 Jetta. People were just happy that Volkswagen had reduced the car's price. But that happiness was tempered by the realization of the "de-contenting" that Volkswagen employed in getting to that price.
At the media preview of the auto show here, the Kia stand was swarming with journalists excitedly examining the new Optima. But over at the Volkswagen display, they were puzzling over VW's introduction of a new midsize Passat family sedan. Their consensus: The new Passat is going to have to be priced just right and offer much more than consumers expect to top the Optima and its sibling Hyundai Sonata sedan in the marketplace.
A decade ago, hardly anyone would have said anything like that about anything from Kia. It causes one to wonder about the prospects of China-based BYD in the automobile business.
The company has spent millions on elaborate displays at the Detroit show in the past four years. But it has yet to offer one car in the United States.
But that day will come soon, possibly sometime in 2012, said Micheal Austin, vice president of BYD America Corp.
And when that day comes, BYD will offer all-electric and hybrid electric vehicles powered by the world's most advanced batteries, charged by wind power and other renewable energy sources, Austin said.
BYD's motto, backed by hundreds of millions of dollars in research and development, is "Build Your Dreams."
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