The Case for Kia

While the rest of the automotive industry struggles, few have noticed the bright spot in the business - Kia, and its corporate parent, Hyundai.

Sales are up dramatically, but more importantly, both Kia and Hyundai are producing high-quality, stylish and relevant cars.

In the last few months, Kia has introduced the Soul, targeted at the youth market, to many positive reviews. It's a well-made, inexpensive small car with character, well-suited to customization and sure to draw attention. Kia is trying to out-Scion Scion, and they may just do it. On top of that, they've come up with a clever, catchy ad campaign that incorporates music that is getting people's attention, too.


At the same time, they replaced the Spectra with the Forte. The Forte has an impressive feature list, a good looking design inside and out, and a very competitive price. Up against perennial winners like Civic, it shows quite well. And the good-looking coupe version (Koup, in Kia-speak) should appeal to style-conscious people on a tight budget, and maybe even those with a little extra cash to spend, too.

Over at Hyundai, they're definitely moving upmarket. Everything in the Hyundai lineup looks and feels solid and expensive. They're incorporating content not generally available at the price point from the competition, and they're moving into segments previously reserved for the Europeans and the luxury brands.

The Genesis is a credible competitor in the near-luxury segment, with good looks, strong content and high-quality materials and construction. It'll never displace BMW for the car nuts (no matter how much Hyundai pitches it that way), but the folks at Buick and Lexus should be nervous. And the Genesis coupe is even a strong player against cars like the Nissan 370Z, with its RWD and strong styling.

While the Americans have been watching the Japanese, and the Japanese have been watching the Europeans, the Koreans have been sneaking up on us. Hyundai-Kia is now the fourth-largest automaker in the world (and the sixth-largest in the US), and given the current state of GM, it wouldn't be at all surprising to see them move up a step or two in the near future.

Competition is a good thing, and Korea is certainly bringing it. Now let's see if the Americans and Japanese can step up their game to match.

Ford and the C-Max

Well, maybe somebody's actually reading this thing.

Ford announced today that they're bringing the European-market Grand C-Max to the US. For those who don't know, the Grand C-Max is a 7-passenger "mini-minivan" similar to the Mazda5. It's based on the European Focus platform, and if previous iterations of the EuroFocus are any indication, it should be a good ride.

The Mazda5 and the Grand C-Max are minivans for people who like to drive. Not as capacious as Siennas and Odysseys, but infinitely more fun. And they are an alternative to heavy, fuel-sucking crossovers.

On top of this, they announced that there would be 10 vehicles built on that same Focus platform, with at least 6 of them coming to the States. That will do wonders for Ford's small-car presence here, and it won't hurt their CAFE numbers, either.

In my previous post, I said that Ford should be (1) leveraging European capabilities, and (2) focusing on small cars. With this announcement, it's clear that they're doing both. I'll be waiting to see how well they do it. Another repeat of the Contour/Mondeo fiasco could be trouble.

GM and the Money-Back Guarantee

I'm adding a bonus post today because of the news that GM will be offering a money-back guarantee on their cars. I'm filing this under the heading of "What are you thinking?"

A few years back, when Hyundai was dealing with quality issues, they wanted to reassure their potential customers, so they created the longest warranty in the biz. There was some risk to this (if they hadn't fixed their quality, the cost of warranty work could bankrupt them), but it accomplished what they set out to do. People were more willing to take the risk on a Hyundai, because they saw that the company was standing behind it.

The GM guarantee is different. It's a 60-day guarantee, so if things break after that, you're still using the same warranty you had before (which, to be fair, is quite good). And interestingly, I can't find any details on the guarantee, so I don't know what conditions have been put on it. It's not mentioned on the corporate website or any of the brand websites, that I can find.

I'd be very surprised if this really changes anyone's mind about buying a GM product. Most of what you can learn in 60 days, you can learn from a decent test drive, so most people aren't going to go to the trouble of financing a car, only to return it in 60 days. Now if they offered a 60-day test drive BEFORE you buy...

If I were the Car Czar (Part 3)

OK, today's target is Ford. Yes, yes, I know - Ford didn't take federal money, so the Car Czar has no say over them, but let's pretend...

And in the interests of full disclosure, Ford is my former employer, although I won't reveal any privileged information here.

Up front, I'd like to say that I think Ford is the domestic with the best prospects by far. Both their financial situation and their product portfolio (current and future) are much stronger than their Detroit (Italian?) rivals. But the bankruptcies of the other two have put them in more competitive positions in some ways. So here are my recommendations for the Blue Oval:

1. Reduce the size of the dealer network, and monitor dealer performance.

This one is tough, because franchise laws make it hard to eliminate franchises, but Ford has way too many dealers given their volumes. Incentives for dealers to merge could help drive a reduction, which in turn could help the bottom line. It's also important to make sure dealers are in tune with the "new Ford". The old Ford was all about the deal - incentives, special financing, etc. The new Ford is about product. Make sure dealers understand what they're selling. This is especially critical with all of the new features, like adaptive cruise control and blind spot detection, and ESPECIALLY Sync. Which brings me to #2...

2. Aggressively expand useful, innovative features.

Sync has been a wonderful selling tool. A number of people have told me that it made the difference in their buying decision. But so far, the Sync platform, which is designed to allow for expansion, has not been fully leveraged. Use the iPhone model and allow third-party development of applications (within reason, of course). Make sure it's fully integrated with all other vehicle features - climate control, navigation, etc. It's a powerful platform, and it can create a strong differentiator for Ford, especially among the tech-savvy youth market.

And don't stop there. Many of the other features that have been introduced are not related to Sync (like blind spot detection), and many aren't even technological (like the integrated step on the F-Series tailgate). But make sure all of the features have a purpose, and aren't just clever gadgets. The F-Series team has done an excellent job understanding what its customers want and delivering innovations that matter, like integrated trailer-brake control. Don't forget that the customer should drive the innovation, not the engineers.

3. Focus on the small cars

Right now, Ford's small car (the Focus), while certainly no slouch, is the weakest link in the Ford portfolio. Don't lose track of that market. For one thing, it's one of the few segments that's growing, and for another, it's a way to get people into the Ford brand so they can graduate to the bigger (and more profitable) cars later.

The Fiesta, with its strong feature set, good driving dynamics and aggressive styling, seems to be a step in the right direction, but the next generation Focus will be critical. And keep an eye on the competition - especially the Koreans. Vehicles like the Kia Soul and the Nissan Cube may not appeal to the older crowd, but they certainly create buzz in the youth market. Mini has been a hit since it came out, and Fiat is likely to be bringing the 500 soon. Ford has strong platforms in Europe and elsewhere that could be leveraged to create similar strong designs. Which leads me to point #4...

4. Leverage Ford's global reach.

Ford has outstanding design and engineering teams on five continents. With GM selling a good chunk of Opel, Ford is the best positioned to be a true "world brand". Let the Europeans and Asians focus on small-car engineering (which they do quite well), and let Dearborn handle the big iron. Use Ford of Australia's RWD experience to develop true performance platforms (next-gen Mustang based on the Aussie Falcon, anyone?). And make use of Volvo's engineering and safety expertise while you still can.

5. Don't try to be "the American Toyota".

Ford's focus on quality has been impressive, and quality levels are higher than ever. But remember that perception is reality. Buyers who are solely interested in reliable transportation continue to go to Toyota, because they have a reputation (albeit a bit tarnished of late) for quality. So Ford needs to have another "hook".

Quality with character can be that hook. People want reliable cars, sure, but they also want their cars to have personality. It's important to note that sometimes, a car with personality will also turn off some customers. Flex is a good example of this. Some people hate it, some love it. But everyone has an opinion. Make your cars something people will talk about.

6. Keep building the relationship with the unions.

Ford already has the strongest relationship with the unions among the Big 3. Keep it up. Sure, unions make some things more difficult, but those guys on the line can tell you a lot about the cars they're building. Just ask Toyota. With good union relations, you can dramatically improve quality, productivity and overall efficiency. And as we've seen, the opposite is also true. Make sure that the unions remain true partners in the business, and you will see the benefits.
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It's important to note that much of what I mentioned here, Ford is already doing. Alan Mulally has done an outstanding job refocusing the company on what matters. But they're still not out of the woods. A continued focus on customer and product will position them well to compete in the global market when the world economy bounces back.