Karl on Cars

Hyundai and Kia's Future: Beating the Chinese Uptown

We all know Chinese cars are coming, and while no U.S.-sold brands are anxious for extra competition, some are more vulnerable than others. After looking at Automotive News' coverage on the future of Hyundai and Kia it's clear both brands want to be well beyond the "great car for the money" phase before the Chinese arrive. Personally I think they've already gotten there, as I don't see the need to qualify a Hyunday/Kia purchase with a "not bad for the money" or "at least the warranty means you're covered" remark.

But the Korean carmakers have laid out an ambitious future product plan. Most of you probably know about the V8, rear-wheel drive, Chrysler 300-sized Genesis luxury sedan scheduled for 2009 (shown above). And as Chrysler has shown, once you have a fully-functional rear-wheel drive platform you can spin off all sorts of fun models, such as a 2010 rear-wheel drive version of the Tiburon sport coupe.

And while a Hyundai/Kia truck has been off the future product palate for some time, both brands are rolling out crossovers like there's no tomorrow (or at least as if there's a tomorrow full of cheap Chinese cars). I count at least eight SUV/crossover-type vehicles in the pipeline over the next three years. And with the 2007 Hyundai Veracruz already approaching $40K (along with a Kia Mesa version of the this vehicle coming for 2009) it's clear the Koreans aren't waiting for Genesis to go upmarket.

I guess if necessity is the mother of invention perhaps China is the father of rapid uptown relocations.

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19 Comments

While I agree that it is inevitable (and necessary) for the Korean marques to move upmarket...
 
We shouldn't even be allowing the import of Chinese automobiles...
 
High lead levels in the paint would be the least of our worries
 
* They have no respect for intellectual property/design, copyrights, etc
http://gemssty.com/2006/10/29/top-10-copycat-cars/
* foreign manufacturers in their country must abide by an arcane set of rules
 
A lot of people like to harp on Japanese & Korean companies for destroying the domestic auto industry - at least they have design studios, headquarters, and manufacturing plants here. The Chinese will never do that - it would effectively nullify their comparitive advantage - dirt cheap labor & loose QC/governmental standards

Excellent post ^. Agree 100%

Unless the Chinese "get it together" they're not going to be a threat to much of anyone, except themselves. I read a first drive of one Chinese manufacturer's car's (a Chery I believe) at Car and Driver. Long story short, the thing was anemic as sin, had mediocre to poor interior quality and had a price point that belonged to a car far, far better than what it was.
 
I do agree with the other poster that the Chinese shouldn't even be allowed to export their cars to the US until the trade disparity is resolved. In any case, though, I'm going to sit back and laugh when they bring their products over here, because they're obviously just not that good and their price is laughable.
 
Cheers to some truly humorous automotive reports for cars where you can't even say, "Well, at least it's decent for the money."

I've been saying it for years - look out Infiniti/Lexus as Hyundai is eventually gonna do to you what you guys did to MB/BMW. They're gonna eventually offer an entry level lux car that offers 9/10ths of a G35/IS350 but also at 85% of the cost. With each generation the gap will close but the price differences won't.

The Chinese cars will be crappy cars initially, but they'll improve dramatically over the years just like Hyundai and Kia have! And they'll eventually build factories here.......

Their entire economy's maturing quickly - I think the current lack of respect for intellectual property and quality is more of a phase that every developing economy has gone through. Companies will soon consolidate, big players will emerge, and they'll find ways to differentiate and protect themselves, ie. quality and lawsuits. At that point they'll be ready to come over here.
 
As for the trade imbalance... that's our fault more than theirs. But have no fear, as China becomes wealthier, their jobs will all be outsourced to Honduras. Anyway, it sounds like the current automakers have more time than they thought, and more pressing concerns...

granturismo01,
I agree with you. Why are we so stupid as to allow this?
Do not rule out Chery/Chrysler combination in the next few years.
 
blueguy,
Agree, Hyundai looks like they learned their 1990s lessons very well. However I think they will have as much an impact on MB/BMW as on Infiniti/Lexus.
 
Domestics and most European brands are in for a rough future. I don't think all of them make it.

"Long story short, the thing was anemic as sin, had mediocre to poor interior quality and had a price point that belonged to a car far, far better than what it was."
 
Was this a review of the current Chinese cars, or the first Japanese cars sold in the U.S. 40 years ago... =)

Karl, I agree. The Koreans are moving foward in quality and technology. The Hyundai Genesis is going to scare more than one car company (japanese, domestic & european). Just review the news that the KIA Amanti performs better in crash test results than BMW 5 series and looks like a Jaguar Type S knock-off. Also, I heard about that other Korean-Chinese car company with the name of "Saamyong" they too are looking to import their SUV's with Diesel power engines engineered by MB.
 
About Chinese cars, they are closer than you think. FYI vacationing in Mexico I saw some peculiar Dodge car models. The Dodge "Attitude" and a smaller one too. They look like the Chery Chinese cars. I think Chyrsler is testing them there before they jump over here. What better than the rough traffic and roads of Mexico.

"Was this a review of the current Chinese cars, or the first Japanese cars sold in the U.S. 40 years ago... =) "
 
Touche, Karl!
 
But weren't the first generation Japanese cars more of a value for the cost that what these new Chinese cars appear to be?

I think you're correct. While the first Japanese cars weren't particularly impressive, the price was. It sounds like neither the quality nor the price of the Chinese car was compelling in the report you read.
 
It will be interesting to see if the Chinese can evolve their automotive products for the U.S. market as effectively as the Japanese have.

I've got to clear up what I said earlier - it wasn't a Chery, it was the Brilliance BS6 (I know, funny) that was tested.
 
Edmunds, try to forgive me for posting a Car and Driver article but this is the one I had alluded to:
 
http://www.caranddriver.com/previews/13310/first-drive-2007-brilliance-bs6.html

Phinneas, you beat me to it... I just edited out the same url in my post.
 
Yes, it looks to be a pretty awful car... for now. Don't forget the disasterous ADAC crash test performances, too.

Worked for two Korean companies and one largely Chinese one. There is something different culturally between the Chinese vs. the Koreans that seems to limit establishing world class Chinese brand names. It appears that Chinese employees are more willing to quit and start a new company that competes with the former employer than Korean employees. In addition, the low respect for intellectual property in China also affects Chinese companies. Manufacturers of the $60 fake Rolex get coppied by the manufacturers of the $20 fake fake Rolex. In general, the Chinese seem willing to cut any corner in an effort to get rich quick while Koreans seem to have some pride in their products and the companies that make them. Generic antifreeze toothpaste vs. Samsung.

Not "some pride", but pride the South Koreans have as people made Hyundai what they are today in the U.S. I've been to S. Korea and have collegues that have been there as well. One thing that is unmistakable when you spend time there is the strong cultural pride and nationalism you sense there. They pride themselves as Koreans and take pride what they do. Same basic philosophies of the Japanese.

Remember it took 20 years of exporting crap here before the Koreans started building good cars. The first Chinese cars will be cheap and crude but I'll bet they will do in 5 years what it took Korea 20 years to do.
 
As for copying, name a car company that doesn't copy features, design ideas or new types of cars from the others.
 
As soon as a car company comes out with a successful model or features, all the competition with come out with their "own version".

firstwagon, yes there is imitation, but have you seen the first link with the comparison pictures?
 
This isn't just inspired design as Hyundai and Kia did several years ago, this is really copied design with slight alterations. It simply isn't defined as anything else. Not unless Honda, Mercedes and others licensed the design and rebadging is this a legal act!
 
It angers me a lot when I see how China gets away with so much lately. I shudder at every product I buy that reads Made in China, because I know it'll break in a year. I've often joked at the concept of Made in China cars and clearly it is becoming more real. As far as I am concerned, when in the modern world with all the high standards we now have for new cars, we see something like the BS6 being a monumental flop with a demonstration of design and execution that is worthy of firing the producers, and a price that dares to be as high as a Camry's, it is time for action, and the media HAS to be meaner. These companies should not be allowed to produce here until there is some basic standard of offering.
 
It always pisses me off when I see how Chinese products get away with so much and yet they are the worst offenders. I miss Made in Japan watches...

I believe our economy will be collapsed without the cheap Chinese products. Why? Just take a look at your local stores like walmart, costco, sears, and target, etc. and all other retail stores where you shop, there are plenty of products made in China being stocked in every corner. Not everybody in the United States can afford to shop at Rodeo Drive and 5th Aveune. I enjoy shopping at the local 99 cents store and I don't think anything bad about buying the cheap products. I own a Japanese made Mazda 98 protege and it was overprice when I bought it, and I can say that only the engine is good nothing else. I welcome the competition especially the Chinese automobile because I want to own a brand new car again.

Firstwagon's comment about "20 years of crap" from the Koreans reminds me of the Japanese products that first hit our shores. I'm old enough (almost 61) to remember when Japanese products became available in the early '50s. Made in Japan meant the same, or actually maybe worse, as Made in China does today. It was actually laughable how bad the Japanese products - all of them - were. It was a common thread among consumers in the '50s - if it was made in Japan, it was junk. My how things change. Obviously, it's changing fast for the Koreans, not only in the automotive business, but electronics.
 
I work in the electronics industry, and a number of my colleagues have contract manufacturing done in mainland China. The quality coming out of these plants is exceptional. Another example is PC board manufacturing - through-hole as well as the surface mount variety. Multi-layer PC boards with excellent quality are delivered at a fraction of the price of board houses here in the states; in fact, the reject rate for the Chinese boards is lower than those built here in the USA.
 
If I were GM, Ford, and Chrysler, I would be absolutely scared to death of the prospect of Chinese cars. China is, and will become, a tremendous economic force to be reckoned within the coming years. The gas prices we pay here in the USA today are directly impacted by the increasing demand in China. Although it will take some time, China is the next United States in terms of industrial might and economic wealth - and this is a tremendous threat to our economy and standard of living.
 
I guess my question is this: If we have economic relations with China (a Communist country), why not Cuba? Money, a Large Source of Cheap Labor, and Politics, all interrelated, are the reasons.

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