- Hyundai relocates Asia Pacific headquarters to Jakarta
- While Kia Motor Asia Pacific reaffirms commitment to Malaysia
- For Kia, Malaysia is more attractive than Thailand
One of the benefits of having multiple brands is that you can hedge your bets, which is exactly what the Hyundai Motor Group (HMG) is doing with the Kia brand in Malaysia and Hyundai in Indonesia.
Hyundai Motor Group (HMG) headquarters in Seoul
Earlier this year, WapCar.my broke the news that Hyundai is headquarters in Mutiara Damansara, which also houses the Hyundai Training Academy (HTA), to Jakarta. The retail operations of Hyundai-Sime Darby Motors remain unchanged.
The relocation to Indonesia is necessary because Hyundai is investing USD 1.55 billion (about RM 6.53 billion) into a new plant at the Cikarang industrial area in Bekasi, east of Jakarta, plus a USD 1.1 billion (about RM 4.65 billion) EV battery plant.
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Hyundai is attracted by Indonesia’s generous incentives to promote electric vehicles, which has also attracted similar EV-related investments from Toyota (USD 2 billion, or RM 8.42 billion), as well as Chinese battery giant CATL (USD 5 billion, or RM 21.06 billion).
On the surface, it’s easy to think that the Hyundai Motor Group is putting Malaysia aside to focus on Indonesia, but the people at Kia is keen to remind Malaysians that they too have regional head office in Malaysia, but unlike Hyundai, Kia has no intention of moving its regional team elsewhere.
Kia Motors Asia Pacific's team (left) and new distributor Dinamikjaya Motors (subsidiary of Bermaz)
The little known Kia Motors Asia Pacific headquarters is located in Naza Towers at Platinum Park, right at the heart of KL city.
From here, a small team of 31 employees (including Malaysians) oversee Kia’s operations across 32 countries in the Asia Pacific region, including Australia and New Zealand, which are wholly-owned subsidiaries of Kia Motors Asia Pacific.
South East Asia has a population of over 660 million and sells about 3.5 million cars annually, before Covid-19.
It holds huge growth potential but it’s also a region where Japan has it all cornered. Toyota reigns supreme here, especially in Thailand and Indonesia – the region’s two largest car market.
Meanwhile in Malaysia, the third largest car market in the region, Toyota’s compact car subsidiary Daihatsu controls Perodua, Malaysia’s No.1 selling brand.
For Korean car brands like Hyundai and Kia, attempting to penetrate into this region is extremely difficult.
Thailand is an extremely tough nut to crack. Note the old Kia logo used, while Malaysia is adopting the new logo
To date, the only country where Korean car brands have made a big impact is Vietnam, the region’s fourth largest car market, where Hyundai has already overtaken Toyota for the top spot and Kia has pushed Honda off to take the third podium spot.
So starting this year, the Hyundai Motor Group (HMG) is adopting a two-pronged approach for the next phase of its assault into the heart of South East Asia.
Separate towers for Hyundai and Kia, joined by a common lobby, signifiying independence and joint destiny. Slightly shorter tower for Kia representing its 'younger brother' status
HMG’s namesake brand Hyundai will tackle Indonesia while Kia, playing its ‘smaller’ brother role within HMG, will push deeper into Malaysia. Why not Thailand you ask? Because Malaysian consumers are more receptive to Korean brands than the Thais.
As far as consumer products are concerned, Thailand is Japan’s colony. The Toyota Hilux, Hiace, and Corolla Altis moves Thailand while Mitsubishi air-conditioners cools their homes and offices, and Lawson convenience stores dominate.
Toyota's Alive Space brand experience centre in Icon Siam mall in Bangkok
At least in Malaysia, K-brand stores like CU and emart24 are very well received.
Despite Kia’s missteps in the past during the Naza era, there are still over 200,000 Kia cars on Malaysian roads.
In terms of products, Kia is confident that its current generation of cars will wipe Toyota and Honda clean, and Kia is tired of being seen as a minor league player here.
Kia's flagship K9, unfortunately it's not available in right-hand drive
One Korean executive who used to look after the Kia brand in Germany told WapCar.my that the people running Kia know how to build a world class brand. They have already done it in Europe and USA – two of the world’s most competitive car markets.
It’s the same in Russia, where driving conditions are very tough on the cars.
More Russians trust Kia than Toyota
“In my last posting in Germany, Kia is in the major league while Japanese brands are the minor league but over here, the situation is different. I am very sorry that Kia hasn’t been received properly here, it is something that we need to fix very badly,” said a Korean executive told WapCar.my recently.
Between January to November 2021, Kia sold 60,976 passenger cars in Germany while Toyota did 65,771 (excluding commercial vehicles). Honda sold a miniscule 7,242 while Nissan shifted 24,343.
The 2022 German Premium Car of the Year is not a BMW, Mercedes, or Audi, but a Kia
Over in Russia, Kia is ranked No.2 while Toyota is ranked No.7, and the Russians are not known for being gentle with their cars.
“I promise that Kia will be reborn as a newcomer here in Malaysia and become a major key player in the Malaysian automotive market,” said Ted Lee, President and CEO of Kia Motors Asia Pacific.
Malaysia may not be as big as Thailand, but Kia sees Malaysia as the best launch pad to penetrate further into South East Asia, a region where trade barriers are complex and local assembly is necessary for commercial success.
Assembly of Kia vehicles at the Thaco plant in Vietnam
Although Kia already has local assembly operations in Vietnam, the capability of local parts vendors there are still much lower than Malaysia’s, which in turn increases the cost of the cars produced in Vietnam.
Comparatively, Kia noted that Malaysia has a relatively mature automotive parts vendor base, which makes us a good choice as Kia’s regional export hub.
Assembly of Kia vehicles will take place at the Inokom plant in Kulim. The Kia facility will be managed by Kia Malaysia, a joint venture between Kia Motors and Bermaz Auto
Joey Hong, coordinating director of sales at Kia Motors Asia Pacific said, “We will try to find ways to export Malaysia-built cars to nearby countries and these strategic approaches are bringing Kia’s core competencies into Malaysia. We’ve been doing all the time, from the past in global markets, we know how to do it, and we will be doing the same in Malaysia.
Production of CKD Kia Carnival to start in April 2022
“We can start with the all-new Kia Carnival, a refined large MPV that is scheduled to be produced in April next year, followed by a new Sorento, a large SUV, cutting edge technology, and then we will produce a new Sportage, a worldwide best-selling model of Kia, and the all-new Niro, a crossover with eco-friendly drivetrains, and that is HEV, PHEV, and BEV for sure.”
CKD Kia Sorento will be introduced in the second half of 2022
Meanwhile, Hyundai’s product range is becoming noticeably thinner here, at higher prices too. Only the Hyundai Santa Fe is still locally-assembled.
The , , , and the are all imported from Korea, and because of their inflated prices, cannot be expected to leave any impact on the local market.
Hyundai Elantra is an amazingly well built car but is let down by its RM 158,888 price,
Perhaps this realignment is necessary. Malaysia is a small market and it makes little sense to have two Korean brands operating under the same parent company to compete with each other.
Elsewhere, both Hyundai and Kia compete on equal terms, a bit like two brothers in a chaebol family locked in a fight for control over the family’s business.
CKD Kia Sportage to join in 2023
Kia Malaysia aims to produce 10,000 cars at its plant in Kulim in 2022, before ramping up to hit 30,000 units by the end of 2026, of which 60 percent will be exported.
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CKD Kia Niro EV is mulled for Malaysia
It’s a modestly achievable figure, considering that 10,000 units per year is more or less what Bermaz currently sells for Mazda (including CBU models).
2022 will also see the return of Chery and Haval (Great Wall) in Malaysia. Next year’s theme looks like one centered on Asian renaissance.
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Keyword: Hyundai chooses Indonesia but Kia prefers to do CKD in Malaysia over Thailand, here’s why