Over the years I have been fortunate to meet with and interview many of the early Korean and Western Hyundai and Kia teams and leadership. Today’s successes were built upon their struggles and can-do perseverance.
I shared some more details such as in early 1962 Kia’s Shiheung production line launched the first in the line-up–the K-360. Production would continue until 1973 with over 25,000 of the sturdy vehicles sold.
I’d add the T600 would signal Kia’s rise … ( Kia= Rising out of Asia).
From my 2012 Hyundai and Kia Motors The Early Years and Product Development
Kia Motors [Now Kia] Kia Worldwide is one of the world’s fastest-moving global automotive brands. It has earned a reputation as an industry leader in design styling along with a full line of fuel-efficient vehicles that have earned critical acclaim and dramatically increased consumer awareness. Interestingly, the carmaker had early roots as a Korean bicycle and motorcycle manufacturer.
In the early 1960s, the Kia Motors Company moved beyond first bicycle components, then bicycles, and motorcycles to produce a highly practical K360 three-wheel utility truck. Across much of Asia, similar vehicles met a demand for reliable low-cost commercial transportation that could transport goods and products often in tight urban areas.
Based on the Mazda Mazdago design, the K360 also signaled Kia Motors’ long technology alliance with the Japanese automaker with a number of cars and trucks eventually licensed from Mazda.
During this era of budding Korean economic development, strong technology ties with foreign partners were common. For example, other Korean firms entered into partnership arrangements with international carmakers, including Nissan (Datsun), Toyota, Fiat, GM, and Ford. Korean industrial groups desiring to enter the car sector forged these alliances to gain advanced automotive technology and know-how. In addition, the government implemented strong trade protectionism in an effort to build a self-sufficient import substitution economy.
In particular, the Korean Automotive Industry Promotion Law required cars to be manufactured locally versus imported from foreign markets.
When pressured by the government to produce Korea-assembled cars, Kia Motors leveraged its strength as an engineering-based company and chose not to assemble compact cars imported as knockdowns (CKD). Instead, Kia set up a full-scale production plant with considerable local sourcing of parts.
Sohari
In 1973, Kia’s Sohari plant opened with the initial production of a pickup version of the Brisa. Drawing on the ongoing relationship with Mazda, the Brisawas based on the second-generation Mazda 1000, which was marketed as the Familia in Japan.
Brisa Pickup
In conjunction with manufacturing the Brisa pickup, Kia Motors also began production of 1-liter gas engines. While the competition sourced engines from their foreign partners, this marked the first Korean company to manufacture its own engines. In the first year of production, 65 percent of the parts in the Brisa, including the engine, drive shaft, and clutch, were manufactured in Korea. This local sourcing was strongly encouraged by the Korean Government and the ratio of locally produced parts increased steadily over the years.
In the fall of 1974, the first Kia Brisa S-1000 four-door sedans rolled off the Sohari production line. Overall the Brisa was a success with 75,987 sold between 1974 and 1981. In 1975 the Brisa pick-up also became the first Kia to be exported when a number were shipped to Qatar in the Middle East.
Brisa Sedan, Sohari Plant
Notably, what spurred the Brisa’s early success was actually its small 1000cc engine displacement. Starting in 1973, an international oil shortage forced gasoline prices to skyrocket creating a supply shortage in Korea.
Veteran Hyundai and Kia Motors executive Mark Juhn who began his career with Shinjin Motors noted that the oil shock had a devastating impact on Kia’s rival— a newly formed and much larger General Motors Korea, a joint-venture company between GM and Shinjin Motors.
Mr. Juhn shared that with high gas prices Korean consumers favored the Kia Brisa and its smaller more economical engine over GM Korea’s first production model, the Chevrolet 1700 with a larger 1700cc engine.
Mr. Juhn also pointed out, “I could say the oil shock brought good luck to Kia but GM Korea struggled.”
[For those of you long associated with Hyundai, Mr. Juhn would later in his career head up Hyundai Motor America and was the driving force convincing HMC leadership to approve and support the game-changing 10-Year, 100,000 Mile Guarantee program].
Mark Juhn with Don Southerton, Seoul, South Korea
Steady Growth
By 1976 Kia also strengthened its position in the commercial vehicle sector by purchasing Asia Motors based in Kwangju, South Korea. Asia Motors manufactured heavy trucks, buses, and a line of military vehicles. In addition, to meet the growing demand in Korea for cars, Kia even started CKD assembly of the Fiat 132 sedan, along with the Peugeot 604, a larger model sedan.
Government Intervention
Despite Kia’s successes, government intervention imposed new mandates over much of the growing Korean economy. Direct competition was regulated across many sectors of industry. In 1981, Kia Motors was told to stop producing cars and concentrate instead on light commercial vehicles. In turn, more light truck and van models were added, including the 1-ton Bongo, the Ceres pick-up and some larger truck models.
Ford Alliance
By the mid-1980s the Korean Government decided to change policy and relax its restrictions on the car and truck companies. Kia was allowed to return to car production. Working with Mazda’s Ford alliance, Kia Motors began to produce the Festiva (known as the Pride in Korea). Export to the U.S. began in 1988. The venture was extremely successful with 300,000 Festivas being shipped overseas between 1988 and 1993.
To be continued…
Know by many as “The Hyundai Whisperer,” Don Southerton has a life-long interest in Korea and the rich culture of the country. He has authored numerous publications with topics centering on workplace culture, new urbanism, emerging premium and up market trends, and entrepreneurialism.
He is a frequent contributor to the media (WSJ, Forbes, CNN Fortune, Bloomberg, Automotive News, Korea Times, Korea Herald, Yonhap, Korea Magazine, eFM TBS, FSR and The Economist on Korea facing business and culture.
He heads Bridging Culture Worldwide a Golden, Colorado based company that provides training, mentoring, strategy, and consulting worldwide to Korea-based global business.
Question and comments? donsoutherton@koreabcw.com or at https://bridgingculture.com
