Kia (000270.KS) unveiled its new high-tech, gas-powered K4 compact sedan to the US market at the 2024 New York Auto Show. Some automakers are sticking to internal combustible engines (ICE) and hybrid vehicle models as demand for EVs has entered a lull for a number of reasons. Is there room for the US market to grow despite economic worries?
Kia America COO Steve Center sits down with Yahoo Finance's Pras Subramanian to talk about Kia's new models, its competition, and the EV transition in the American auto market.
Center elaborates on his stance on the US market: "A lot of things have changed in the last 12 months. The supply chain is pretty much recovered, you don't hear about those problems anymore. The manufacturing has caught up. Competitors that were more disproportionately hurt by the supply chain are back. So the market share is starting to rebalance a little bit. We're trying to hold on to what we gained over the past few years. "
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
PRAS SUBRAMANIAN: With Kia today right now, the Kia K4 just debuted just now, global debut. Just two different models a hatchback and a regular car. Joining me now Steve Center, COO of Kia America. So, Steve, talk to us about this K4 here debuted just now. How does it fit into the mix of Kia's portfolio?
STEVE CENTER: We're very excited about K4. It will eventually become our entry sedan. And sedans are very popular because of their affordability and their size. And the K4 comes in two body styles.
This is the four-door. It also comes in a five-door sporty wagon. And we're very excited about that because it's going to attract a lot of young customers to Kia for the first time.
PRAS SUBRAMANIAN: It's interesting because the K4 is not an EV, it's not a hybrid. It's a traditional gas powered car. But Kia also known for its EV9. That when North American car of the year just earlier today, the EV6 which is sporty, a smaller, sort of crossover type of vehicle.
So Kia kind of doing two different paths here. Is that the strategy for you going forward? Has that changed at all?
STEVE CENTER: Absolutely. We're still investing in our internal combustion line of cars and are investing to build out our EV line of cars. So where you'll see Kia within the next couple of years is two full lines of cars. So depending on where you are, or what you need, or what your preferences are, there will be an EV for you or there will be an internal combustion for you.
PRAS SUBRAMANIAN: And you kind of envision that dual path going on for years to come.
STEVE CENTER: Quite some time until the transition is complete whenever that is.
PRAS SUBRAMANIAN: So no real pivot though from, let's say, going more EV to back to traditional or vice versa.
STEVE CENTER: No. And we're still growing. We're growing overall, and we're still growing the ICE side. So it gives us a chance to be able to fund all of these projects.
PRAS SUBRAMANIAN: So before we talk about bigger picture stuff with the industry, I want to quickly talk to you about what's happening in Baltimore with the port situation, that awful situation there at the bridge. Some automakers have been impacted by that port closing. What's going on with Kia? I know that Kia obviously imports a lot of cars, but they also build in the United States, too.
STEVE CENTER: Yes, we do. We have a factory in West Georgia. And we're building the Hyundai Motor Group meta plant outside of Savannah. When I saw that on the news, I was absolutely horrified.
But we got on the phone. And actually, we don't use that port. So it won't affect our business at all. But in a sense, it still will because that port is closed until they can clean that up and reopen the waterway. Excuse me.
And the other ports are going to have to pick up the load. And we use some of those ports. So you're going to end up with congestion in Newark and other places.
PRAS SUBRAMANIAN: Basically, there's going to be some spillover effects here and there for shipping industry.
STEVE CENTER: Everybody.
PRAS SUBRAMANIAN: So big picture looking at the American auto market, the US auto market, which you're in charge of here. COO of. Do you see it growing? Is there a tenuousness on the part of the consumer, or are they from Kia's point of view, still wanting to buy new cars? There's unmet demand there.
STEVE CENTER: Absolutely. I think a lot of things have changed in the last 12 months. So the supply chain is pretty much recovered. You don't hear about those problems anymore.
Manufacturing's caught up competitors that were more disproportionately hurt by the supply chain are back. So the market share is starting to rebalance a little bit. So we're trying to hold on to what we gained over the past few years.
The interest rates are a little higher now. Dealers have inventory now. So the over MSRP pricing has been reduced or eliminated in many cases. So it's a more normal market.
PRAS SUBRAMANIAN: Would you say that Kia's customers have been impacted by these higher rates, these higher for longer rates we've seen?
STEVE CENTER: Everyone has. And quite frankly, I'm old enough to think that these aren't so high. When I began my career in the automobile business, the interest rates were 21%. So it was pretty crazy then.
But they've been very unusually low, historically low for a long time. So the price of the same car is now more expensive because most people finance the cars by leasing or taking a loan out. And that's troubling for consumers. You had a lot of inflation unrelated to the cars. That's eaten up their disposable income. So it's troubling.
PRAS SUBRAMANIAN: At the show today, I've been noticing a lot of the Korean automakers and Japanese automakers really putting a full force of products out here today talking about Kia sister brand Hyundai and also Genesis. I think a lot of Americans are kind of curious. How does that relationship work? Is one market, one sub market, or is-- My understanding is Kia kind of covers all of them.
STEVE CENTER: Yeah, we cover everything. We have an interesting relationship. We're sort of separate companies. We're sort of managed separately.
But there is some overlap in areas where you can gain efficiency of scale. So, in some cases, we're competing directly. In some cases, we don't cover the same segments.
One of the things that we're working to introduce is a line of what we call purpose built vehicles which are work vans. And that's a completely new business for us. And we've got them running in range from small to large. And they're electric.
And there are a lot of companies like cable TV companies and delivery companies that are just aching for these types of vehicles. So that's all new business for Kia because we're the only ones doing that.
PRAS SUBRAMANIAN: So there's commercial, as well as consumer-based products here?
STEVE CENTER: Absolutely.
PRAS SUBRAMANIAN: We haven't seen those at the show yet, but we're seeing a lot of really cool looking EVs, and also K4. So Steve, thanks so much for joining us. Really appreciate it.
