SOUTH KOREAN AUTO IMPORTERS DUEL FOR U.S. SHARE: HYUNDAI STILL IN THE LEAD, BUT KIA IS GAINING MOMENTUM

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With their parents facing economic difficulties at home, South Korean car importers are locked in a share battle in the U.S.

Kia Motors America has momentum on its side. It now has dealers in 32 states and is continuing its rollout, with a plan to be national by June.

Last month, Kia sold 7,197 vehicles -- a 174% jump from January 1997 and 771 units ahead of Hyundai Motor America, which has more dealerships and more than 10 years establishing its brand in the U.S.

Kia was far behind Hyundai in total U.S. sales for 1997 -- Kia sold 55,325 cars last year vs. Hyundai's 113,186, according to Automotive News. But Kia is clearly gaining ground. Its unit sales figures jumped 52% over 1996.

In South Korea, Hyundai Motor Co. is the country's largest automaker with about 45% of the market; Kia Group is second.

`WEATHERED THE STORM'

Despite difficult times in Korea, "I believe we have weathered that storm," said W.K. Kim, president-CEO of Kia's U.S. unit.

The car marketer has sold itself in the U.S. as affordable and approachable via humorous ads from Goldberg Moser O'Neill, San Francisco. Two new spots featuring the Sephia model broke Feb. 9 carrying the tag: "It's about time everyone had a well-made car."

Kia expects to spend about $40 million this year, and will bow in Chicago with 16 dealers in about five weeks.

EXECUTIVE EXODUS

In the U.S., Hyundai has been suffering from an executive exodus. Its top U.S. executive, Bob Parker, senior VP-sales and marketing, unexpectedly resigned Feb. 10 after 11 months on the job.

Mr. Parker denied speculation he quit because of meddling from South Korea. He told Advertising Age his departure "involves me more than Hyundai. It was a personal decision."

Hyundai is shifting an undisclosed portion of its $65 million annual ad budget from national TV to spot TV, print advertising, promotions and the Web. Its agency is Bates USA, Irvine, Calif.

The auto marketer returned to print advertising late last year after a year's hiatus, said Bruce Goren, national advertising manager. Bates is developing a new commercial touting the full model line, which will break nationally in March.

`WE'VE CHANGED'

"We are still unfortunately not looked at with the same durability and reliability as some of our competitors," Mr. Goren said. "We're telling consumers we've changed .*.*. We stand behind our products."

Meantime, Mr. Goren is awaiting a new boss. In addition to searching for Mr. Parker's replacement, Hyundai is looking for a single executive to replace Maurice Bowen, marketing director, and Jim Hossack, VP-product planning, who were let go in December.

Both Hyundai and Kia will launch new products in the next two years. Hyundai plans to enter the minivan and sport-utility vehicle segments, and will have redone its entire product lineup by 2000, Mr. Parker said.

Kia expects to introduce its first minivan, the Sedona, late next year as a 2000 model. It also will unveil a two-door convertible version of its sport-utility Sportage this spring, and a new small car in late 1999.

Another South Korean carmaker, Daewoo Motor America, is still developing plans to enter the U.S.

General Motors Corp., which wants to boost sales in South Korea and other foreign markets, is reportedly close to a deal for a joint venture with Daewoo in Asia.

Daewoo has set up four regional offices in the U.S., which will each operate autonomously. Each has separate ad agencies.

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