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A driver fills up a 2012 Kia Rio. (Moe Doiron/The Globe and Mail)
A driver fills up a 2012 Kia Rio. (Moe Doiron/The Globe and Mail)

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Do you think less of Hyundai-Kia after their fuel economy blunder? Add to ...

Last month, Hyundai Canada had its best October ever, with sales up 4.5 per cent. This was the 46th straight month of Hyundai’s growth. The company’s Elantra compact exploded in October, with sales up 42.2 per cent, while on the year Elantra sales are up nearly 20 per cent. Indeed, the Elantra is Canada’s second best-selling car.

Kia’s sales, meanwhile, were up 24.1 per cent last month, also the 46th straight month of rising sales, while sales on the year are up nearly 20 per cent. In releasing its latest results, Kia noted that its brand was included among the Top 100 Best Global Brand, in a study released by Interbrand. Kia’s brand value is estimated at $4.1-billion (U.S.), which firmly positions the auto maker 87th on the list. In the same study, Hyundai is ranked No. 53 overall, with a value of just less than $7.5-billion.

By any measure, Hyundai/Kia is a force. Combined Canadian sales of the two are at 186,440 through the end of October. Hyundai and Kia together are bigger in Canada than Toyota and its Lexus brand, as well as Honda and its Acura brand. Hyundai/Kia, in fact, represent the fourth-largest auto company in Canada by sales, behind Ford, Chrysler/Fiat and General Motors.

Except officials at both Hyundai and Kia are fiercely defensive when the conversation turns to their individual brands. While much of the research and development work for both brands is done in the same R&D centre, witness the issues that have emerged around fuel economy claims for both brands – the ones that have given both brands a black eye.

Company officials insist that they position the brands differently. Everything under the sheetmetal is shared, but styling, features, packaging, advertising, and all the rest are unique to each brand. Hyundai is being positioned as something of a Toyota-like brand, while Kia is oriented towards a younger buyer. Think of Kia as something akin to a mixture of Honda and Nissan.

The Hyundai side of this conglomerate is further along on the path to so-called global greatness. Just a decade ago, Hyundai essentially brought Kia out of bankruptcy. So it should be no surprise to find that Hyundai came out on top in a recent brand loyalty study from J.D. Power and Associates. The study measures customer-loyalty rates by vehicle brand.

The idea here is to uncover who’s remaining loyal to which brand. J.D. Power noted that, for 2012, the industry brand loyalty average is 49 per cent, with Hyundai ranked first with a 64 per cent loyalty rate. Hyundai, noted Power, is doing well retaining the loyalty of women and younger customers. This speaks well for the Hyundai’s future.

Hyundai is also a profit-spinning machine. Late last month, Hyundai said net profit jumped 17.4 per cent in the nine months to Sept. 30 from a year earlier. Hyundai is earning big returns because its products are being better recognized for quality, design and technology. Worldwide, Hyundai sales were up nearly eight per cent through the first nine months of the year. Kia’s third-quarter net profit was up 28 per cent, for the record.

The point is, Hyundai/Kia is a global force in the auto industry, an immensely profitable one with grand ambitions. Both brands will survive the recent embarrassment and fallout over incorrect fuel economy numbers dating back to 2010. In fact, both brands have grand plans to expand into new and uncharted segments of the market.

Hyundai has already started down this road, introducing the big Equus luxury sedan and the smaller Genesis sedan and coupe premium cars. Kia Canada, meanwhile, is looking to introduce an all-new luxury flagship sedan that has already gone on sale in Korea. Using the platform shared with the Genesis and Equus, the Kia K9 is a rear-wheel drive sedan, “our first rear-wheel-drive large sedan for more than a decade and sets new standards for advanced design, new technologies and driving performance,” says Soon-Nam Lee, Kia’s overseas marketing director, in a product release.

Kia chief designer Peter Schreyer adds, “The K9 is a clear signal of our intention and determination to compete head-to-head with the European luxury brands. And for Kia, our customers, and for me – this car is like a dream come true.”

I’ve driven the K9 and it’s impressive. Kia’s return from the dead is impressive. Hyundai’s astonishing turnaround over the past two decades is equally amazing. But I will say that this latest fuel economy embarrassment, as well as the so-so results in Consumer Reports’ latest reliability study, are warning flags that the Hyundai/Kia monster should not ignore.

It takes years and years to build a car brand, but real damage can be done almost overnight.

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