Peter Schreyer says the Kia Soul will attract people to the brand.
It's out there now, this cheeky term for what South Korean car maker Kia Motors is aiming to become under its German design chief: cheap chic.
At auto shows you hear cheap chic mumbled by wisecracking, overly clever members of the press. The more serious auto analysts say it and giggle with a kind of naughty smile. And the blogosphere is alive with postings about this new design turn taken by Kia, the one ignited three years ago when Peter Schreyer turned his back on a career at Audi, Volkswagen's increasingly bold luxury brand and went across town to Kia.
Across town? Absolutely. Schreyer hasn't left Germany to work in Seoul, the South Korean capital. Not at all.
Kia has a design centre in Frankfurt, as well as in Los Angeles and in Seoul. So while home base is in Germany, the 55-year-old Schreyer commutes across continents in his quest to reinvent Kia's look and, by extension, its image.
"I do at least one long-haul flight a month, sometimes two," he says.
Design is at the very centre of what is happening at Kia. Thus, Schreyer is a critical part of the effort to not merely revive but utterly reinvent a company that was bankrupt and essentially dead and buried a decade ago when fellow Korean auto maker Hyundai swooped in to help.
Schreyer's story at Kia began three years ago when the company came calling. Kia was looking for a car designer who had real-world experience at turning around the bland designs of car company.
Schreyer was their man.Thirty years ago, he was there when Audi hung its future on what at the time was a risky move to become a sporty German brand with an unusual technology: "quattro" all-wheel-drive.
"I think that Audi was in a very kind of similar position that Kia is today," he says.
"It was the little brother of Volkswagen and at the time the cars were technically very good, but not that attractive. Little by little, they [Audi]built up their design, technical abilities and built up the brand. I think that was a very important experience to go through that."
Kia is attempting a similar transformation. It envisions itself a youth brand, though still a mainstream offering, with affordable features and eye-grabbing styling - cheap chic. Schreyer weighed the opportunity, calculated the risks, looked back on 30 years at Audi and the Volkswagen group, and waved auf wiedersehen.
But Kia? Until the Soul hatchback came along this year, Kia's car were generally seen as the antithesis of stylish, if they were thought about at all. That's changing and the obvious symbol of what is going on is the Soul.
If the Volkswagen Beetle was and remains the core symbol of what VW stands for - the People's Car - then the Soul speaks for what is happening at Kia.
"Right, it's our Beetle. The Soul is kind of the black sheep of the [Kia] family, but in a positive way," Schreyer says, before adding, "The Soul is kind of the essence of Kia, but it has a distinctive character of its own.
"I think it shows that Kia is in a very positive mood. … Normally, you would expect [a Korean company]to work very carefully, and say, 'Okay, what is the trend and what are the others doing and who is successful. Let's do the same.'
"The Soul shows a different kind of self-confidence. It says, 'Okay, this is our thing and we do it our way.' It takes guts to do a thing like that. It needs people in a decision-making level saying, 'Yeah, no matter that there are some people who say they don't like it. Okay, who cares? But there are a lot of people who will like it.' This is sometimes a good thing. You create a little bit of friction and discussion."
Lately, the friction and the discussion seem to be working. Earlier this month, Kia Motors said second-quarter earnings nearly quadrupled with the help of government tax incentives in South Korea and rising overseas demand for small cars. Net profit reached 347 billion won ($301-million) in the April-June period. This occurred as most of the world's auto makers are bleeding red ink.
Kia delivered 428,615 vehicles in the second quarter, with domestic sales spiking by 42 per cent, though overseas sales slipped 7.9 per cent over last year. Kia sales in Canada for the year were up 20.4 per cent through the end of July.
Kia aims to boost global unit sales by around 7 per cent this year with new models and aggressive marketing. The goal is to sell 1.5 million vehicles in 2009, compared with 1.4 million units last year.
This year, Kia is launching three new models: the Soul, the Forte compact sedan and the Forte Koup two-door.
The Soul, a boxy crossover vehicle along the lines of Nissan's Cube and Toyota's Scion xB (which is coming to Canada next year) is the centrepiece of the design-led transformation.
Schreyer argues that the Soul is authentic in that it reflects the youth-oriented push going on at the company. As he sees it, Kia now is in a similar place to Audi back in the late 1970s when the Audi 80 arrived with a racy new look, a 220-horsepower motor and quattro.
That car set the direction for Audi over the next 30 years. When he first saw it in 1978, he was serving an internship at Audi while studying industrial design in Munich.
"At that time Audi was a car just for geography teachers and accountants or whatever. It was nothing special," he says. "For Audi, that was the breakthrough. I remember the moment I walked in. It was a white car with orange Audi rings on it."
Kia's challenge is to move its brand from bargain-basement little brother to Hyundai to smart, slick yet affordable favourite of young buyers. (Hyundai owns a 39-per-cent controlling stake in Kia and together the two form the Hyundai Kia Automotive Group).
Meanwhile, Hyundai is slowly but steadily moving up-market, aiming one day for near-premium brand status. Hyundai is arguably further along in its strategy to be the second coming of Toyota.
Hyundai now can boast a string of good results in quality studies done by Consumer Reports, J.D. Power and Associates and others. Moreover, Hyundai has successfully launched the Genesis premium sedan and coupe and next year will launch the Equus large luxury sedan.
Kia's image, despite the success of the Soul, is still decidedly down-market. The company's strategy is to use cutting-edge designs like the Soul and combine them with improving quality scores to change public perception.
If the plan works, buyers will soon associate Kia with fun-to-drive cars that are hip and cutting-edge.
Still, it does help mightily that the Korean currency, the won, is as limp as stewed spinach. This makes exports from Korea cheap to buy and profitable to sell in Canada and elsewhere, despite a 6.1-per-cent duty.
"They need to get people past the cheap Korean car image," Dan Gorrell, president of Auto Stratagem, a research and consulting company in Tustin, Calif., recently told Businessweek magazine.
The latest model to join the Kia lineup in Canada, the Forte Koup, is just now rolling into dealerships. Next up is the VG, a replacement for the decidedly dull-looking Amanti large sedan. It will come later this year or early next.
A new Sorento crossover is coming early next year and that model is already creating a buzz in Kia's Korean home market. The Sorento is scheduled to go on sale in the United States early next year.
By the 2012 model year, nearly all of Kia's vehicles will be redesigned as the company emphasizes value-priced, fun-to-drive vehicles.
"For us to take our brand to the next level and to grow awareness and improve the perception of the Kia brand, we will have to refresh our model lineup," says Kia Canada chief operating officer Maria Soklis. "By early 2012, the Borrego [SUV]will be the last model to be refreshed."
By then, Schreyer hopes the design, quality and technological shift now under way at Kia will have taken hold. By the middle of the next decade, if all goes to plan, the world will look at Kia and see something very different from today. Above all else, price - the deal - will not be Kia's defining characteristic.
"I think if we - and I am not talking about premium or non-premium - if we are in a position to be well-known for great design and attractive cars, where people say, 'I want to go to the Kia dealer first and see what they have and not think about the price so much,' then that will be good."
Cheap chic, in other words.