Heads Roll--Again--As Kia Rushes To Own U.S. Market Segment

Finbarr O'Neill, Peter Butterfield, Bob Cosmai, Steve Wilhite, Len Hunt and Ian Beavis could be names on a memorial fountain in Fountain Valley, Calif. They are all marketing brass who have been fired--or resigned before the fact--from Kia and Hyundai's U.S. sales arm over the years.

The latter two--Ian Beavis has been vice president/marketing, and Hunt was CEO--were told on Friday to pack their bags. The change came as Byung Mo Ahn was appointed chairman and group CEO of Kia Motors America and production facility Kia Motors Manufacturing in Georgia.

Tim Chaney, Kia's director of marketing, will become interim head of marketing. Randy Maurstad will head product planning, and Alex Fedorak, public relations.

Ahn was president/CEO of Kia's U.S. sales arm for two years in 1999. A source close to the company says changes at the U.S. sales arms of the Korean companies are like changes in White House administrations -with the entire Cabinet getting shown the door.

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Todd Turner of Car Concepts, an L.A.-based automotive market consultancy, concedes that the Friday coup reflects a deeper problem: that corporate leaders have opinions that are, to put it kindly, immutable.

"Kia and Hyundai's Korean management doesn't stand the same test of logic that American--or Japanese for that matter--marketers apply to the U.S. market. Part of the problem is that they don't seem to have a realistic view of what their sales numbers should be. When Kia was up 4% at the end of last year against a flat market, most companies would consider that good news. But they have sales targets they give to North American management in January, and if you don't meet them, you're fired. They have targets and goals and don't adjust them."

There may never be a good time to clean house in the auto business, but it's especially bad timing for Kia. The company this year launches its first SUV, the Borrego, this summer and a new crossover wagon, Soul. "It's a critical car to the Kia brand and one that Ian had really good ideas how to market," says Turner. "Did they cut off their nose to spite their face?"

Dan Gorrell, who follows the LA-based import brands closely, would say yes. He agrees that whether or not Kia was trying to solve a problem, they may have created one: "The system is running out of talent."

The company last year had its 14th consecutive year of record sales with 305,473 units, with nine months of record sales in 2007. "Their goal was 325,000 or 350,000," says Turner. "And I suppose if you are Kia management you are looking at Toyota," he says.

Gorrell adds that the Korean marketers want to move up market quickly, partly because China and India are preparing for their historic squeeze into an already jammed back seat of the lower-range mass market. "There's pressure [for Kia] to move up in the U.S.," he says. "It appears that in China and other emerging markets Kia and Hyundai are doing well. That's the rising tide. But there isn't one right now in the U.S."

Sang-Kyu Lee, professor of accounting at Western New England College in Springfield, Mass., who moved to the U.S. 10 years ago, says that Korean business culture reflects family control, the young age of capital democracy in Korea and - for the automakers - an even briefer history in the U.S.

"If you look at LG, Samsung, Hyundai, they are now controlled by sons of founders," he says. "They can do whatever they want, and with strong support of their aides. Unfortunately, the aides are frequently yes men. And at Hyundai and Kia, the number of yes men around the [controlling] Chung family is large."

He adds that the control trickles down. "Even though they try to delegate authority to make decisions to local offices, they really make decisions in Seoul. And they make them fast."

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