Kia to Kill the Kia Borrego?
Okay, one of my New Year's resolutions was to lay off the Hyundai-Kia Kool-Aid for a while, but with Kia pulling a move that looks like it's right out of the official Krome on Cars fuel-efficiency playbook, I couldn't resist.
Here's the story: Recent months have been filled with a string of new product debuts for Kia '” including the well-received Kia Forte and funky Kia Soul '” as well as a steady stream of info about the company's significantly revamped 2011 model lineup. But now, the South Korean automaker is suddenly in the news for a vehicle it's not going to launch: the 2010 Kia Borrego.
Kia's full-size, body-on-frame SUV was first introduced in the U.S. in 2008, just as the economy was going up in flames. Oil prices remained high, and many analysts thought the days of inexpensive gasoline were finally over. At the time, Kia also was still struggling to move beyond mere competence and start producing actual high-quality vehicles, and the Borrego exemplified these struggles.
It "featured" bland styling, equally bland on-road manners and, despite its "real SUV" construction, a disappointing lack of off-road ability. Also disappointing were its sales results. Kia originally was hoping to move some 20,000 Borregos a year, but will end up selling about half that number in 2009.
Today, the Borrego seems even further out of place. There's still a significant market for body-on-frame vehicles, but the Borrego isn't trucky enough to attract hard-core SUV customers.
Mining the November numbers for one more column, one can see Borrego sales pegged at 825 for the month. Year-over-year comparisons aren't valid here, since production of the vehicle was just ramping up last November, and there just weren't a lot of Borregos on sale back then.
But that being said, the full-size, body-on-frame Chevrolet Tahoe sold 6,528 units in November 2009, a 57.3 percent increase over November 2008. The GMC Yukon eked out a .1 percent sales increase, with 2,253 units sold this past November. Sales of the Ford Explorer dropped a bit in November, down 6.8 percent, but the vehicle still found 4,440 customers. The Nissan Pathfinder was up 34.3 percent in November, with sales crossing the 1,600 mark. The Jeep Grand Cherokee, at the very end of its life cycle, sold 3,085 units in November 2009.
So, the Borrego is a flop against its key body-on-frame rivals, and yet it's still too trucky '” and inefficient at the pump '” to compete with the current crop of best-in-class crossovers. Based on size, the Borrego would be aimed at such winners as the Chevrolet Equinox, Ford Edge, Honda Pilot and Dodge Journey, all of which trump the Kia both in terms of amenities and fuel efficiency.
Further, the Kia wouldn't normally be ready for a full redesign for a few years still, years during which the vehicle would get left further and further behind by the competition, regardless of whether it's compared to SUVs proper or crossovers.
Faced with this situation, Kia has put the 2010 Borrego on "hiatus" '” meaning it will stop production of the vehicle '” with the SUV's future "to be determined" at a later date. And I'm going to position this decision as the Hyundai-Kia team cutting the last body-on-frame vehicle in its lineup to further its goal of becoming/staying the most fuel-efficient OEM in the country.
It's a big decision to make, especially considering all the money that must have gone into the Borrego's development, but I'll rummage around in Krome's Big Bag of Cliches and come up with the one about not throwing good money after bad.
No, the market for body-on-frame vehicles won't disappear, but it will certainly continue to shrink. The players who had a few years ago looked to make a quick buck in the segment will continue to drop out, and the pros '” especially the domestics '” will continue to raise ye olde bar. As a result, it will cost more money to compete in a more competitive, shrinking segment.
That's why I'm thinking the Borrego will be resuscitated in a year or two as a crossover. The already has a nice track record in the crossover segments, and the Borrego would fit in comfortably above the Kia Sportage '” on pace to see 2009 sales surpass last year's by more than 30 percent '” and the completely redesigned Kia Sorento, which goes on sale this month with a particularly striking new look.
It's also worth noting that, Kia's parent company is rolling out a new Hyundai Tucson crossover this year, too, and it already boasts the popular Hyundai Santa Fe crossover, which is another one of the rare vehicles that will see an annual sales increase for 2009.
Of course, cutting the body-on-frame Borrego now shows something even rarer: A company that knows where it can compete '” and where it can't '” and actually makes business decisions based on that information.