From Risk to Reward: Kia's Transformation

From Risk to Reward: Kia's Transformation

In 2008, Kia’s offering in the U.S. was lackluster. Average styling. Average quality. Average safety ratings. Little technology. Below average resale values. Advertising focused on price. There wasn’t much for car buyers to get excited about when it came to Kia.

Fast forward eight years and Kia is now a top-selling auto brand in the U.S. with one of the highest quality and safety ratings.

From Underdog to Leader

Kia developed and executed a plan to become best-in-class in every category and invested billions when competitors were retreating in the face of a collapsing economy. What unfolded over the next 36 months shocked competitors who believed Kia wasn't anywhere close to becoming relevant let alone dominant in the auto industry.

On the evening of November 17, the Center for Asian Business welcomed Adam Perlow for a special lecture titled “How Kia Became the Fastest Growing Automotive Brand in the U.S.” As vice president of sales operations for Kia Motors America, Perlow played a pivotal role in Kia’s transformation from a generic and boring brand into one of the hippest, top-selling, and most reputable auto companies in the nation.

“Kia is all about adversity,” said Perlow. “It’s a challenger brand that had to figure out a way to compete to become mainstream. We looked at the recession as an opportunity instead of a challenge. While most companies were closing factories and laying off employees, Kia invested billions in new products, marketing and dealer networks in the U.S.”

Reviving a Brand

In Korean, Kia is roughly translated to “rising out of Asia” and that’s exactly what the company has done over the last few years. The first priority for Kia was to improve the quality of its vehicles. Today, Kia’s quality ranks 6th by J.D. Power and Associates, better than many well-established brands like Honda, Nissan, Ford, BMW and Volkswagen. In fact, Kia is now outselling most luxury vehicles. And with a new focus on quality, Kia now has the longest warranty (10 years) in the industry. In addition, nearly all Kia models have 5-star safety ratings.

The company also hired Peter Schreyer as president and chief design officer to create a consistent and innovative design. German-born Schreyer, hired from Volkswagen in 2006, is widely known for his design contributions to the Audi TT. The Kia Soul was the first vehicle to undergo a design transformation, and as of October 2014, the entire Kia lineup has completely transformed.

Kia sales skyrocketed thanks to sleek new designs and clever TV advertisements featuring hip hamsters that appealed to Generation Y. Kia also partnered with high-profile celebrities like Lady Gaga and Maroon 5 and secured a lucrative sponsorship with the NBA. Basketball superstars Blake Griffin and LeBron James now act as ambassadors for the Kia brand.

Establishing American Roots

The U.S. and China are Kia’s largest markets. But in order to become more significant in the U.S., Kia decided to build a plant on American soil. They did so in West Point, Georgia and created an entire economy with thousands of new jobs for the small, isolated town. The Optima and Sorento models are currently made at the Georgia plant. With Kia’s new and improved brand image, the company also decided to redesign all Kia dealerships to make the customer experience more consistent with its new brand image.

Key Elements to Success

In sum, Kia was able to achieve enormous success by focusing on the following key elements:

  • Quality
  • Safety
  • Design
  • Technology 
  • Warranty
  • Marketing
  • Residual Value
  • Dealer Network
  • Product Cadence
  • Sports Sponsorship

The Center for Asian Business organizes several lectures a semester as part of its Y.B. Min Lecture Series which focus on current Asian issues that have an influence on our economy, foreign affairs and cultural understanding.