Why Are Kias So Cheap?
In the 90s, South Korean car manufacturer Kia didn’t have the same reputation and popularity that it enjoys now. Just the thought of buying a Kia would be enough to make most people’s eyes roll into the back of their heads. Fast forward to today, we see Kia pump out hits after hits to the automotive market with popular models like Telluride, Sportage, and Sorento.
Kias are very popular because they make high-quality vehicles that provide plenty of entertainment and safety features. However, we all know that Kias are so popular because they’re relatively inexpensive, especially compared to their competitors.
Apparently, people will come if you build high-quality cars that don’t skimp on features and make them affordable. Who would have thought? In all seriousness, why are Kias so cheap? Let’s take a look at some of the potential reasons why Kias are sold for less considering their generally high quality.
Why Are Kias So Cheap: The Main Reasons
Kia vehicles are inexpensive compared to comparable models from other companies because they have a considerable cost advantage over the rest of the competition. In case you don’t know, the Hyundai Motor Group bought Kia in 1998 to keep it afloat. As of now, Hyundai owns 33.88% of Kia Motors’ interest. However, it’s worth noting that Kia and Hyundai aren’t the same manufacturers – think of them as corporate sisters.
This is relevant because only Hyundai and Kia are the only automotive companies with their own foundry. All the other car companies have to buy their metals from metal manufacturers, which drives up the price. This, of course, gives Kia and Hyundai the ability to manufacture metals to be used for their vehicles. As a result, Kia can manufacture cars at lower costs and lower prices than the competition.
In addition, most of Kia’s assembly plants are located in South Korea, and only a single plant in the U.S. Because of this, Kia can import vehicles to the U.S. tariff-free.
Moreover, Kia doesn’t use as many expensive metals and plastics in making their vehicles. The materials used are lower in quality than other manufacturers, but Kia is quite smart when it comes to production. Some of the cheaper plastics are used sparingly, so many of Kia’s interiors look and feel fancy – but they still managed to save on production costs and pass the savings to the customers.
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Do Kias Hold Their Value?
Why are Kias so cheap? We’ve been digging deep into Kia, and another reason why its cars are inexpensive compared to something like Honda and Toyota is that they have so-so resale value.
Iconic Japanese brands like Honda and Toyota have proven themselves in making high-quality, long-lasting, and reliable vehicles. Kia doesn’t have that sort of reputation, at least not just yet. In reality, most people tend to associate Kia with its not-so-impressive track record in the past. It was only a few years ago when Kia finally broke through the mainstream market and enjoyed relative popularity from consumers.
Unfortunately, Kia is one of the worst brands when it comes to holding value. According to MotorTrend, the Kia belongs to the bottom of the list with a 47.7% average value retention. Although the South Korean car company has done a lot to revitalize the Kia brand by giving out compelling offerings and a generous standard warranty, this indicates that Kia still has a long way to go.
To illustrate, a Kia Rio with a brand-new price of $15,841 and 47% depreciation will have a resale value of $8,395 after five years. The same can be said with the Kia Optima, with a brand-new price of $25,000 and will have a price of $11,887 in 5 years. Losing about $14,000 in half a decade of ownership just isn’t fun.
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Is Kia a Reliable Brand?
Why are Kias so cheap? Is it because they’re unreliable and prone to break? On the contrary, according to experts, Kia is one of the more reliable brands out there.
In a recent 2022 U.S. Vehicle Dependability Study by J.D. Power, Kia gets the top rank overall in vehicle reliability. In 2021, Kia ranked 3rd in overall reliability, which means the company has been upping its game and making its cars more dependable. Kia is followed by Buick and fellow South Korean company Hyundai.
If we head over to RepairPal, it tells a similar story of Kia’s reliability. With a reliability rating of 4.0 out of 5.0, Kia is ranked 3rd out of 32 for all car brands, according to RepairPal. In addition, Kia owners are likely to spend $474 per year on repairs, which is a lot lower than the $652 average across all models.
Visits to the mechanic are also less frequent with Kia owners because they’re only expected to visit 0.2 times a year for unscheduled visits. Furthermore, only 10% of all Kia repairs are considered severe, compared to the average of 0.4 times for all makes and models.
You can fault Kia cars for many things, but reliability is certainly not one of them.
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Is It Worth It to Buy a Kia?
Kia vehicles are far from perfect, and they do have glaring issues. These issues have made consumers apprehensive, especially when Kias are offered at a much lower price.
Kia found its way into the hearts of consumers because they offer a good value proposition. Although its lower price tag has contributed to its popularity, Kia isn’t only popular because they are inexpensive. Kia has done a great job listening to customer feedback and applying them to their future vehicles. For this reason, Kia keeps on improving, earning awards, and breaking sales records.
You get a car with good performance, excellent safety scores, striking designs, and a generous standard warranty for a relatively inexpensive vehicle. Is it worth it to invest in a Kia? Unlike old days, you’ll be less likely to regret buying a Kia today.
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