Battle of the tinies for Kia and GM Daewoo
Koreans are turning away from slicker, larger sedans toward compact cars that are cheaper to buy and drive.
There are only two domestic compact models available with engine displacement of 1 liter or smaller, and the 1-liter new Morning from Kia Motors has a five-month waiting list of more than 40,000 customers.
That means customers who recently signed up to buy the car have to wait until at least November to actually see the revamped version of the Morning, which was released in January.
Its rival is the 0.8-liter Matiz from GM Daewoo Auto and Technology. The Matiz, however, is not flying off the showroom floor and customers can drive one home a few weeks after purchase.
But one GM Daewoo dealer said the carmaker may soon scrap customer promotions, such as free air conditioning and anti-theft alarms amid rising demand for the fuel savers.
In Korea, compact cars do not come with air conditioning as a basic option and it costs 510,000 won ($500) to add the upgrade.
“Current production volume cannot meet the exploding demand,” said a Kia spokeswoman.
“We didn’t expect the Morning to be that popular.”
Last year, Kia sold 28,404 Mornings, while in the first quarter alone of 2008, the firm has sold 26,025 cars, largely due to sky-high oil prices.
Gas prices per liter at stations across the nation have surpassed the 2,000 won barrier.
The spokeswoman said Kia is considering setting aside a portion of its export volume for domestic demand.
Until last year, the Morning was considered a car outside the compact car classification, meaning the Matiz was monopolizing the category.
When the Korean government raised the engine displacement ceiling for the smallest vehicle category from 0.8 liter to 1 liter to increase the market share of smaller vehicles, the Kia product suddenly emerged to defeat the Matiz.
Design and innovation factors also contributed to the Morning’s popularity.
While the Matiz underwent three changes since its release in 1998, the Morning has adopted a handful of options designed to appeal to a younger demographic.
One of them is an iPod-ready dock, unusual in Korean vehicles.
The latest upgrade for the Matiz came in 2005.
In the first four months of this year, the Morning was the third-best selling vehicle among all domestic cars. The Matiz was No. 6.
With gas prices going wild, customers have lost appetite for larger vehicles.
In the first four months of 2008, on-year sales of the 1.6-liter Avante, a subcompact from Hyundai Motor, the 3.3-liter Grandeur sedan also from Hyundai and the 2-liter SM5 sedan from Renault Samsung dropped 14, 13 and 25 percent, respectively, according to the Korea Automobile Manufacturers Association.
With a slightly bigger engine than the Matiz, the Morning is more spacious. It is 4 centimeters longer and 10 centimeters wider than its rival. But the Matiz is 2 centimeters higher than Morning, enabling the GM Daewoo product to offer a slightly wider line of sight.
A Matiz with an automatic transmission costs up to 9 million won, while Morning sells for 10 million won or more. Both models offer fuel efficiency of 16.6 kilometers per mile.
Beyond price and fuel efficiency, the cars provide another benefit: taxes. The government provides discounts of 300 won per liter to drivers of compact cars, starting in May until the end of this year. The annual limit for the combined discount is 100,000 won and households driving two or more compact cars are exempted.
Compact car drivers are also granted a discount on highway tolls and public parking.
The age group buying the small cars is expanding, too.
“Those in their 20s and 30s are the major buyers of the new Matiz. But older generations are increasingly seeking to drive the cars,” said a GM Daewoo spokesman.
By Seo Ji-eun Staff Reporter [firstname.lastname@example.org]