As Most Car Sales Surge, Kia and Hyundai Lag

Cars and Drivers

Published: August 4, 2013 8:24 am

Last Updated: August 5, 2013 6:49 am

One of the most extraordinary aspects of July U.S. car sales was the evenness of the advance among the largest firms. The exception to that was once-surging Kia and Hyundai, which have suddenly become also-ran brands.

General Motors Co. (NYSE: GM) benefited from the rising success of all divisions. Cadillac sales were up 16.7% month over same month of last year. Buick was up 13.9%, GMC 14.1% and the giant Chevy division by 17.1%. Given the diversity of the brands and the way that they are aimed across a broad demographic scale, GM has built a success by regaining the broad appeal it had before its bankruptcy.

Ford Motor Co. (NYSE: F) has been nearly as successful, with the significant exception of its Lincoln division where sales dropped 0.8% last month, but they are down much more than that for the year. Ford brand sales, on the other hand were up 11.8%.

The leaders of unit sales percentage increases for most of the past three years were Hyundai and Kia. They replaced Japanese car companies in terms of perception of value and reliability at low prices. The interruption of Japanese car production brought on by the earthquake only helped the two South Korean car companies. Owned by the same parent, they offered remarkably long warranties and wild incentives. And the programs worked.

However, what a difference a year makes. A short skirmish with the government over the MPG numbers the two car companies posted ended with a humiliating disclosure that the figures actually were wrong. Some portion of owners and potential buyers thought they had been duped. It is still not clear whether either company has rebounded. Hyundai sales rose 6.4% last month but are up only 2% for the year. Kia sales rose 1.9% but are down 3.1% for the year.

One of the most pertinent questions about what has happened to Kia and Hyundai is why their sales have not recovered more quickly, as was the case for Toyota Motor Corp. (NYSE: TM) after recalls that hit more than 8 million. The answer may be as simple as that Toyota had built its brand reputation over decades, while Kia and Hyundai had much less time.

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