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Despite U.S. growth, Kia still lags rival Hyundai

Kia Motors, with sales rising 78 percent from 2008 to last year, has been the fastest-growing brand in the United States. What it hasn’t been able to do is shake the role of little brother to larger affiliate Hyundai.

Hyundai is Kia’s biggest shareholder, and the two Seoul automakers share a chairman, vehicle platforms and powertrains. They also compete for resources and customers, and that’s where the relationship is unequal: Hyundai buyers consider Hondas, Toyotas and Fords and largely eschew Kia.

At the other end of the spectrum, Kia shoppers are mostly looking at Hyundai.

“For Kia it’s like the younger brother who asks a girl out on a date, who tells him I’m actually more interested in your older brother,” said Alexander Edwards, president of San Diego-based Strategic Vision’s automotive practice. “Only about 5 percent of all Hyundai buyers looked at Kias.”

While the rivalry between the Korean companies, which operate separately in the U.S., mirrors that in their home market and globally, Kia still lags, even as demand for Soul wagons and Optima sedans grows. The lack of awareness limits the brand’s potential and forces the carmaker into profit-sapping discounts, which have grown to double those offered by Hyundai.

“Kia never really came up in conversation or in my research at first,” said Chris Ferguson, a Fairfield, Ohio, resident who bought a Hyundai Elantra early this year, rather than Kia’s competing Forte compact. “Don’t get me wrong, they weren’t bad vehicles, but they seemed to be the economy version of the Hyundai.”

After surging 36 percent last year, Kia’s U.S. sales of cars and crossovers are up a further 32 percent this year through March. At the current pace, the company may sell more than 550,000 vehicles this year, more than double its 273,397 U.S. sales in 2008. Kia uses ads featuring Blake Griffin, the professional National Basketball Association’s reigning rookie of the year, as well as dancing hamsters to promote its models.

Hyundai’s U.S. sales are up 15 percent through March, and may exceed 650,000 units, based on the company’s market share forecast. Industrywide U.S. light-vehicle sales rose 13 percent in the quarter.

Hyundai, while increasing sales less rapidly than Kia, has managed to trim incentives by 26 percent so far this year to an average of $823 a vehicle, while Kia has boosted discounts by 8.5 percent to $1,677 a vehicle, according to researcher Autodata Corp.

Hyundai is considered by about 20 percent of new-car buyers, according to Strategic Vision, which surveys about 300,000 people a year for its automotive studies. That 20 percent marks a crucial threshold, he said, making Hyundai a competitor to mainstream brands of Toyota, Ford and Honda.

Only 9 percent have Kia on their shopping list, Edwards said.

Toyota is the most frequently considered brand, at 41 percent of those surveyed, followed by Honda at 37 percent and Ford at 35 percent, Edwards said.

While Hyundai’s consideration level matches that of Chevrolet and Volkswagen, Kia’s ranks just behind Chrysler’s namesake brand at 10 percent.

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