Kia takes cue from affiliate and reduces car prices

After Hyundai Motor announced it was cutting the prices of some of its models last week, its smaller affiliate Kia Motors has followed suit and is now offering the 2013 edition of its K9 model for less in a bid to raise competitiveness against foreign auto brands.

Kia, the nation’s second-largest automaker, released an upgraded K9 yesterday. Its flagship sedan now includes a heads-up display as a basic feature and can be purchased for up to 2.91 million won ($2,740) less than the 2012 edition. Known as the Quoris overseas, the K9 now costs between 52.27 million won and 85.38 million won.

Kia said it also reduced the number of trims available for the K9 as customers complained of being confused by the array of packages and options on offer.

“Despite adding some new features, we cut the price so customers can have more benefits,” Kia said in a release. “We’re trying to gain a pricing advantage against luxury imported cars.”

Kia sold 7,599 units of the K9 last year after it was released in May. Although it targeted monthly sales of 2,000 units, the actual figure has hovered between 500 and 700 in each of the last three months.

Kia said it has cut 290,000 won of the retail price of its K5 2.0 Prestige, a midsize sedan, and that customers can now enjoy up to 630,000 won of its new Sorento R, a sport utility vehicle.

Hyundai lowered the prices of its Sonata, Genesis, Genesis Coupe, Santa Fe and Veracruz vehicles by between 220,000 won and 1 million won last week, at around the same time drivers learned they would have to start paying more consumption tax. The government ended a temporary, 1.5 percentage-point tax cut on Jan. 1.

Hyundai’s latest action is in line with Hyundai Motor Group Chairman Chung Mong-koo’s New Year’s message, which emphasized making changes to stabilize the company’s operations. It has been slowly ceding domestic market share to foreign rivals in recent years, even though its overseas sales have been climbing.

Hyundai and Kia’s combined domestic sales stood at 1.14 million last year, an on-year decrease of 2 percent. Sales of imported cars jumped 24.6 percent over the same period to a record 130,858 units.

Industry insiders suspect that the price deduction also shows how Hyundai is willing to join the “economic democratization” trend by helping local consumers as they face greater financial difficulties.

Chung said in his New Year’s message that Hyundai will strive to become an exemplary company in terms of promoting shared growth with smaller companies.

By Joo Kyung-don [kjoo@joongang.co.kr]