L.A. Sales Surge Fuels Korean Automakers' Rebound.

Korean automakers have staged a dramatic turnaround in Los Angeles, as consumers are snapping up cars from local dealerships in volumes not seen since the 1980s.

Hyundai, Daewoo and Kia are all showing sharp new-car sales gains this year, as they rebound from years of consumer uncertainty about the quality of their products.

"(Korean car companies) are an amazing story," said Derek Humphrey, manager of North American Forecasting for the Agoura Hills-based automotive research firm J.D. Power & Associates. "They are gobbling up market share like crazy."

Hyundai sales are up 101 percent in the Los Angeles market so far this year. Korea's largest automobile manufacturer sold 3,353 vehicles in the first five months of 2001, up sharply from 1,665 in the same period last year.

Likewise, nationally, Hyundai had its biggest sales month in history in May, moving 31,597 vehicles off its dealers' lots. It surpassed the previous high of 30,472 in July 1987.

Kia, which doesn't release specific regional sales figures, says its L.A.-area sales are up more than 50 percent from last year, 56 percent in its western region. The company also reports that nationally it had a record-breaking month in May with 20,048 vehicles sold, topping the 19,159 mark it set in March of this year.

Daewoo, showing signs that a reorganization of its auto division is working after a cash crunch throughout the giant conglomerate, has seen its L.A.-area sales jump to 1,333 vehicles in the first five months of 2001, almost triple the 493 sold in the like year-ago period. Daewoo entered the North American market just two years ago, and until recently sold its cars almost exclusively through a handful of company-operated locations.

Its success has attracted the interest of General Motors Corp., which sold its 50 percent-stake in Daewoo in 1992, but is negotiating to possibly buy the entire company.

Expanding market share

Collectively, Hyundai, Kia and Daewoo currently account for about 6 percent of the national new-car market, more than a percentage point higher than in May 2000.

"The (consumer) worries about quality are being overcome," Humphrey said. "They also are among the lowest-priced cars in their (market) segment."

Hyundai saw its sales slump in the late 1980s and early 1990s, but it has gained traction in recent years, due largely to a 10-year, 100,000-mile powertrain and 5-year, 60,000-mile bumper-to-bumper warranties. Kia has adopted similar warranties, with Daewoo also stepping up its performance guarantees.

Combining generous warranties with higher fuel efficiency in an expensive gasoline market has attracted more consumer interest. Likewise, sticker prices that run from as low as $9,000 on models like the Hyundai Accent to less than $20,000 for a fully loaded Daewoo Leganza CDX are bringing carbuyers to lots, Humphrey said.

"When Hyundai took its dive, Southern California was one of the places where we got hit the hardest," said Bob Cosmai, Hyundai's vice president of national sales. "In Southern California, you are what you drive, and when there were image challenges for our cars, we paid for it here. But now, it looks like that perception may be changing."

The Southern California market only represents about 7 percent of Hyundai's overall car sales, but Cosmai said the company's goal is to have the region eventually account for between 12 and 15 percent.

National boost

As is often the case, Southern California seems to be setting a trend for the rest of the nation, as Korean automakers see sales increases in other states, according to auto industry observers.

"Southern California always seems to be an indication of things to come (in the auto industry)," he said. "It definitely is a trend-setter. Koreans are a strengthening influence in the Southern California auto market -- and getting stronger. And that means they probably will be stronger in other places, too."

Toyota, the largest Asian carmaker operating in the United States, has noted the progress made by Korean automakers.

"They're doing very well," said John Hanson, Toyota's national product news manager. "Their quality is better, and they are making more of an impact."

But that impact hasn't affected Toyota sales, which owns about a 10 percent share of the U.S. and Southern California markets.

"We had our best month ever (in May), too," Hanson said. "So the Korean manufacturers haven't hurt us at all to this point. Whether they will in the future, who knows?"

The rise in Korean auto sales also means a rise in business for local ports. Hyundai shipped about 34,000 cars through the Port of Los Angeles last year, and as many as 50,000 are likely to go through this year. Daewoo sent about 15,000 autos into the L.A. port in 2000 and plans on sending at least that many or more through in 2001. Kia ships its inventory into the Bay Area.

"It's definitely good news to us if that (projected increase in Korean car imports into L.A.) happens," said Al Fierstine, the L.A. port's director of business development. "It adds to our bottom line."