Hyundai, Kia make mark in stressed U.S. market

South Korea's Hyundai Motor Co., the star performer in last year's dismal U.S. auto market, at the Detroit auto show showed off three of seven new models it's rolling out this year and next, targeting not only Detroit's Big Three but Japan's leading automakers.

Hyundai and its Kia Motors affiliate were the only major carmakers to increase sales in an industry transformed by dramatic shifts that also appear to have put the brakes on the biggest Japanese car companies.

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. were hit nearly as hard as the U.S. automakers in last year's slump. But in a market that contracted 21 percent, Hyundai and Kia increased their combined sales 9 percent by offering affordably priced, reliable and fuel-efficient cars, boosting their U.S. market share two points to 7.1 percent.

Japan's top carmakers struggled, meanwhile, with problems associated with Detroit's Big Three -- slumping demand for large vehicles. Toyota's U.S. sales sank 20.2 percent last year, Honda's sales fell 19.5 percent, and Nissan's were 19.1 percent lower.

This year, Japan's Big Three face even more pressure, caught as they are between energetic Asian rivals and U.S. automakers that have slashed costs through restructurings and bankruptcies.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, estimates that General Motors Co. has reduced its costs up to $6,000 per vehicle, narrowing or even eliminating the Asians' cost advantage.

"The $2,000 legacy cost disadvantage could turn into a cost advantage" for the U.S. automakers, Cole said. That could allow them to field more attractive and richly equipped models, he said. "It's a very big deal."

Meanwhile, companies like Hyundai are beginning to challenge the Japanese. Hyundai Motor America Chief Executive John Krafcik says Hyundai now draws from the same pool of customers as Japan's top manufacturers. "We conquest heavily from Ford, GM and Chrysler, but some of them," he said, referring to new Hyundai customers, "are Toyota- and Honda-intenders. That's a huge difference from before."