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Kia, GM Korea vie for city car sales

Kia Motors Corp. and GM Korea Co. have been in keen competition to dominate the growing “city car” market at home as high fuel prices continue to burden households.

According to the Korea Automobile Manufacturers Association, local sales of automobiles with engine displacements of up to 1 liter grew by nearly 20 percent during the first seven months of 2011, compared to the same period last year.
Kia Motors’ Morning
Kia Motors’ Morning

The latest version of the Morning city car from Kia Motors Corp. is gaining popularity while the automaker aims to sell 100,000 units in the domestic market and 120,000 units overseas this year.

The company hopes to raise the overseas figure by 20,000 next year, pushing up the combined sales figure to 240,000 units.

Kia officials call the new Morning a “masterpiece.”

“Its performance, segment-topping fuel economy, and safety features provide values that go beyond the so-called city car,” a senior official said.

For Kia, the Morning has played a crucial role in its recent growth spurt, which has seen the carmaker’s market share at home rising above 30 percent in 2010, for the first time since 1995.

With more than 101,000 units sold on the local market last year, the Morning is Kia’s bestselling vehicle, accounting for more than a third of the company’s passenger car sales.

Including sport utility and commercial vehicles, the Morning accounts for about 20 percent of Kia’s total sales at home.

The vehicle’s performance figures put it ahead of the competition at a glance.

The new Morning’s engine packs 82 brake horsepower, and manages 19 kilometers per liter with automatic transmission and 22 kilometers per liter with manual transmission.
GM Korea’s Chevrolet Spark
GM Korea’s Chevrolet Spark

For GM Korea, the Chevrolet Spark has been appealing to young and female consumers, testimony to the changing trends in the local market.

Launched last year, the Spark comes in several pastel colors including “Manhattan silver,” “Sapporo white” and “Monaco pink.”

Contradicting the popular belief that pink is too unconventional for a car here, the pink Spark accounted for nearly half of the model’s sales.

The automaker, which adopted the Chevrolet brand earlier this year, continued to see strong growth in the domestic market, particularly aided by a strong performance from the city car Spark.

GM Korea, the No. 3 carmaker in the local market, is out to challenge its rival Kia Motors by betting big on superior quality and designs.

“We’re going to challenge. We’re going to challenge our competition in all the segments, but in particular in areas where we have not competed before,” company CEO and president Mike Arcamone said.

“We’re going to bring in exciting products and that’s how we’re going to disrupt the love-hate relationship (consumers have with Kia products).”

Since the company launched the Chevrolet brand in March, it unveiled five new cars ranging from compact car Aveo to the Cruze Hatchback; three more will come in the second half.

Automobile dealers say that one of the factors behind the growing sales of city cars is high fuel prices, and uncertainties about general economic conditions also may have contributed.

City cars’ popularity is also attributable to tax benefits, lower petrol consumption and a 50-percent discount on highway tolls, as well as convenience in large cities crowded with traffic, including easy parking.

While existing city car models enjoy unprecedented popularity, the country’s market for such vehicles is expected to receive a further boost in the coming years with Kia Motors and GM Korea adding a new mini car to their lineup.

In 1998, when the country was hard hit by the Asian financial crisis, city cars’ share of the local passenger car market rose to 27.5 percent. Since then city cars had fallen out of favor resulting in their market share dropping to 4.7 percent in 2006.

In 2008, city car sales picked up significantly with the legal limit on city cars’ engine displacement being increased to 1-liter, including the Kia Morning in the segment.

Prior to the changes, city cars were defined as those with engines smaller than 800 cubic centimeters.

Some auto experts forecast that city car sales will continue to climb at a faster pace than sales of other segment vehicles for the time being, aided by uncertainties over the global economy as well as the launch of new city car models.

But there are also predictions that Kia and GM Korea could undergo a slowdown in sales of cars for all segments including city cars due to global recession fears from the eurozone debt crisis.

By Kim Yon-se (kys@heraldcorp.com)
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