Wednesday, December 8, 2010

Rapping rodents phat for Kia

Rapping hamsters boost image but without product improvement, how long will it last?

Unlike many businesses, 2010 has been good to Korean automaker Kia.  Sales were up 15% through October -- on pace for a record year in sales.  The company has benefited from a "perfect storm" of circumstances:
  • a bad economy
  • offering a line of low priced vehicles (approx. $8,000 lower than  competitors)
  • public acceptance of rapping hamsters in a television campaign (see below)

The big question...
With product quality sliding in consumer-based rankings (from 15 to 25 place in a recent J.D. Powers  survey), how long will the rodents be able to prop Kia sales up?   In the long-term, it is hard to imagine consumers trading vehicle quality for a formulated image.  American auto buyers have shown in the past that even low prices cannot make up for a poor vehicle (remember the Yugo?).

The current good sales situation offers time for Kia to get their product "house in order".  It will be interesting to see if they take advantage of it.

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