Sales That Triple — A Feature Every Car Should Have

Honda (NYSE: HMC) and Toyota (NYSE: TM) had horrible domestic sales in the U.S. in July, mostly because of parts shortages caused by the Japanese earthquake. GM (NYSE: GM) barely hit forecasts, and Ford (NYSE: F) missed. At the opposite end of the spectrum, sale of the Kia Optima tripled from 1,857 in July 2010 to 6,772 last month. The small car’s sales reached 43,389 for the first seven months compared to 17,484 in the same period a year ago. Its parent, Hyundai Motor, is one of the largest car companies in the world.

The improvement came in an environment of decelerating sales in America. GM’s total vehicle sales for the month were only up 7.7% to 214,915. Ford’s sales rose 8.7% to 180,317. Toyota, once the No.2 car firm in the U.S., reported a sales drop of 22.7% to 130,802.

The rise of the sales of Kia and its stablemate Hyundai have been widely covered. Those sales have begun to have a tremendous effect on the American market, and will change the rules for which vehicles do well here. Together, the South Korean name plates sold 105,065 cars and light trucks last month. That is more than Honda sold and nearly as many as the resurgent Chrysler.

The Kia is a fine example of the army of cars the South Korean company has brought to America. The 4-door is priced just below $20,000 and gets 35 mpg on the highway. It comes in a hybrid version, sporting any popular engine type. It has the latest nifty options like a GPS system from Garmin. Other Kia models, like the mini-SUV Sportage, are similarly affordable. Hyundai has attacked the highest end of the market while Kia works on the lower. The Hyundai Equus has a sticker price is $64, 000 and it has features which match BMWs and Mercedes that are priced tens of thousands of dollars more.

Hyundai, the parent of both the Korean brands, has done something that has not been done for four decades in the U.S. It has launched a full line of cars and light trucks that compete in virtually every sector of the market, and it has priced them aggressively. Hyundai Motor is the second largest company in South Korea with sales of $79 billion last year. It has a balance sheet that U.S. car companies cannot match.

The Kia is the tip of an iceberg that is growing and will probably take a share of the U.S. car market that is larger than all except four or five car companies by next year, or the following one.

Douglas A. McIntyre