Hyundai and Kia gain from European crisis
With stands in opposite ends of the exhibition halls at the Geneva motor show, it is clear that Hyundai and Kia are attacking the European market on two fronts.
Their models range from Hyundai's new flagship, the Grand Santa Fe - which marks the brand's entry into the market for large, luxurious sports utility vehicles - to Kia's Provo concept, which is gunning at the quirky Mini.
In the marketplace, Hyundai and Kia are rivals, often offering alternatives to each other's models, though the two South Korean carmakers operate as sister companies at the corporate level, sharing both technologies and components.
Hence, although many of their models are very similar under the skin, both their sales and marketing efforts as well as their designs have been carefully honed to distinguish them from each other.
As a strategy, it has been extraordinarily effective. In Europe, both carmakers have seen their sales double during the past five years or so, pushing their market shares to 3.5% for Hyundai and 2.7% for Kia, up from 2.9% and 2.2% in 2011.
"The driving force has been that they are now producing cars that cater to European tastes and offer extremely good value and quality," according to Chas Hallett, editor-in-chief of What Car?
This year is set to be different, however.
"Such growth rates cannot be maintained forever," says Paul Philpott, chief executive of Kia Motors UK and Ireland.
Tony Whitehorn, Hyundai Motor UK's chief executive agrees.
"We have a constrained production situation in 2013," he says.
"We just cannot get enough vehicles [to maintain growth rates]."
Hyundai and Kia's capacity crunch comes at a time when European car sales are falling much faster than anyone had predicted just a few weeks ago.
"The first two months have passed and it is not [the anticipated] 3-4% falls in sales we're seeing," says Carlos Ghosn, chief executive of the Renault-Nissan Alliance. "We're seeing 8-9%. The European market's going to be weak, and not only in 2013, but in 14, 15, 16 as well.
"The question is; is it going to be bad, or is it going to be really bad?"
Paradoxically, the crisis puts Hyundai and Kia in an enviable position.
Whereas many of their rivals are struggling to tackle costly overcapacity in their European factories, the South Korean carmakers are producing at 100% capacity in their European factories in the Czech Republic and Slovakia.
And with demand for their cars holding up while their rivals suffer falling sales, the South Koreans' market shares are growing even as they are standing still.
This gives them time to do what Mr Hallett believes they should be doing, namely polishing their images.
So far, the two marques have established themselves as qualitatively on par with more established rivals, yet passion for their models rarely runs high.
"The fly in the ointment is their brand equity," Mr Hallett reasons.
"What they need to work on now is increasing desirability - so that their cars can become less rational purchases and more emotional choices."
Making both Hyundai and Kia more desirable will be the job of Peter Schreyer, who was recently promoted to oversee design for both marques globally as they each take different paths towards further growth.
"The design must capture the philosophies of the two brands," he says. "It must be authentic."
In other words, it would be no good to simply make a Ferrari-style supercar with a Kia badge, or an ultra-luxurious Bentley-style limousine with a Hyundai badge, and hope that car buyers would associate the marques with high performance or refinement.
Instead, the shift will need to be gradual, with slightly sportier, funkier models such as the Hyundai Veloster or the Kia Pro Ceed slowly changing consumers' perceptions.
The other challenge is to make sure the two marques remain sufficiently different to make sure they do not compete head-to-head in the same segments, though Mr Schreyer insists this requirement should not prevent either marque from doing anything.
"You cannot avoid similarities anyway," he says.
"You always have them, even between companies that are not part of the same group, as we all work with the same rule books."
European carmakers might be playing by the same rules when it comes to what is feasible in terms of engineering and design, though in the market place there is no such egalitarianism.
Established European brands grumble as they are faced with South Korean products made in Korea, or in ultra-modern factories in Central Europe.
Efforts by incumbent carmakers in France, Italy or elsewhere in Europe to cut costs and restructure in order to square up to the South Koreans are often blocked by politicians who want to save jobs at a local level, often in the short run, bemoans one chief executive at the show.
Allowing the South Koreans to expand freely without giving them a free hand to restructure in order to fight back could eventually result in even more job losses, he reasoned.
But take the economic contribution of Hyundai and Kia into account - the two contribute about 1.7bn euros ($2.2bn; £1.5bn) in taxes to European governments and support more than a quarter of a million jobs here, according to consultants London Economics - and it becomes obvious that the two companies have as many friends as they have enemies in Europe.
Hence, any political efforts to curb their growth is unlikely to be forthcoming.
"I would anticipate them carrying on in the same vein," says Mr Hallett.
"There's nothing to stop them being the world's number one maker in the future."
You can follow Jorn Madslien's coverage from the Geneva motor show on Twitter @jornmadslien.