South Korean SUV shoot-out

Hyundai owns Kia. The two South Korean companies together recently overtook Ford as the fourth largest car manufacturer in the world. They share R&D facilities at Namyang, outside Seoul and their cars feature the same platforms and engines.

So you'd think there'd be a spirit of cooperation between the two companies, right? That's not the impression you get though, from speaking to management of the companies' Australian distribution networks.

As a 'for instance', the two importers have independently engaged in local evaluation of each company's LPG/hybrid small car, the Hyundai Elantra LPI and the Kia Cerato LPI. Both cars use the same hybrid drivetrain systems.

The most recent example of the rivalry between the family brands was the Global Green Challenge last week. Both Hyundai and Kia fielded their respective mid-size SUVs (Santa Fe and Sorento) in the event. While the Santa Fe is an upgrade of the car sold here since 2006, the Sorento is altogether new, but built on the Santa Fe's platform and running the same R Series diesel engine.

Despite a slight weight penalty that favoured the Sorento in the long-distance economy run, the leading SUV at the finish was the Santa Fe driven by Ed Ordynski and John Cadogan. Recording a consumption figure of just 5.1L/100km, the winning Santa Fe used 160.46 litres to cover the distance of 3147km. The two Sorentos took silver and bronze, with the second Santa Fe finishing just outside the placings.

So with the two importers already standing toe-to-toe and poking each other in the chest, how will they fare in the marketplace? The Santa Fe comes in cheaper ($37,990) than the Sorento with the same all-wheel drive and diesel powerplant ($39,990), but the Sorento is also available with an entry-level front-wheel drive model powered by a 2.4-litre petrol engine.

For those families who like the idea of an SUV, but would never go offroad and are working to a budget, this vehicle (priced at $36,490), might be the variant that keeps them out of the Hyundai showrooms.

Taking into account the Kia's newer styling, the Sorento may have the advantage, but Kevin McCann, Sales and Marketing Director of Hyundai Australia takes a different view.

"Our name is associated more with positive values," he told the Carsales Network during the recent launch of the upgraded Santa Fe, a vehicle that is no longer available with FWD-only variants or smaller-capacity petrol V6s.

McCann cites such things as Hyundai's dealer network and history in the marketplace as elements working in the importer's favour against Kia.

"Those are our strengths."

Looking at the product alone, McCann believes that Hyundai has made the right move, narrowing the number of variants in the Santa Fe range -- even though there's a view that it plays into the hands of Kia and its Sorento.

McCann admits that for the front-wheel drive Tucson variant, the importer was "able to take about $4000 off the price" -- versus the four-wheel drive variant nearest in price. But much as that sort of cost saving applied to the larger SUV would make the Santa Fe more competitive against the Sorento, it would yield few extra sales in practice.

"Having a front-wheel drive with a petrol engine doesn't give us much more [market share]," says McCann. The sole front-wheel drive Santa Fe sold here in recent times was powered by a 3.3-litre V6 engine.

"If [consumers] want that much power, they want four-wheel drive as well," he explained.

But McCann believes Hyundai can offer an alternative to those families who like the Santa Fe, but are working to a reduced budget. It's the ix35 compact SUV. Due here early next year -- before the end of the second quarter, apparently -- the new model was introduced at the Frankfurt motor show back in September. It's a vehicle that is intended by the manufacturer to be a serious competitor to Ford's Kuga and the Volkswagen Tiguan.

In other words, it should be a much more advanced vehicle than the Tucson it will replace in Australia. With that added refinement, safety and dynamic competence, the ix35 is expected to provide a much smoother entrée to the larger Santa Fe once it's in the market place. McCann revealed that it will be available powered by a choice of petrol or diesel engines.

It may draw buyers into the showroom, where they can be 'converted' to the Santa Fe, should they need seven seats and generally larger packaging. So ix35 could neutralise the threat posed by the front-wheel drive Sorento.

"We see ourselves approaching the market in the future... by integrating [Santa Fe and ix35]," says McCann.

"We'll be able to have a much broader [demographic] than with the Tucson."

The question then remains, will ix35 be enough to thwart the next Sportage, that Kia is believed to have in the works for a global release early next year?

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