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Toyota and Kia bet on sports cars to turbocharge brands

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[January 15, 2014]  DETROIT (Reuters)  Asian rivals Toyota Motor Corp <7203.T> and Kia Motors <000270.KS> unveiled concept sports cars this week that appear to target different demographics but share a common goal to add some sizzle to their brands.

Toyota said the FT-1, a muscular-looking coupe unveiled Monday at the Detroit auto show, would deliver the type of heart-pumping performance CEO Akio Toyoda has complained is lacking in its fleet of reliable but predictably designed cars.

Toyota said it was not sure whether it would take the car into production and did not disclose specifications. But analysts believe it is plotting a return to the segment after discontinuing the Supra more than a decade ago, and that it will likely produce a high-performance model catering to a well-heeled clientele.

Kia, meanwhile, appears to have a younger client in mind with its 315-horsepower GT4 Stinger, which also had its debut at the auto show. It cited the Mazda MX5 and Scion FR-S  a Toyota offshoot brand focused on young customers  as possible competitors down the road.

"I don't see this concept competing with Porsche or Ferrari or Lamborghini or something. There are other mass market brands which offer sporty cars," Tom Kearns, Kia's chief U.S. designer, told Reuters.

Toyota, the world's largest automaker, and Kia, a much smaller South Korean affiliate of Hyundai Motors <005380.KS>, are in vastly different stages of their development. But both see a sports car as a way to invigorate their brands.

For Toyota launching a high-performance vehicle would bring an excitement into their line-up that has been largely missing since it called it quits on the Supra in the U.S. market in 1998, said Edmunds.com analyst Jessica Caldwell.

"It has been accused of very boring, appliance-like cars. I think they need to do something to shake it up," Caldwell said, adding that she believes it should revive the Supra brand. "Older people remember it, they like it."

While Kia doesn't have any track record in sports cars to build on, it could have success if it is priced under $25,000  putting it in the same price range as the youth-focused FR-S, Caldwell said. She reckons Toyota might look to compete at a higher price point, somewhere between the FR-S and a Porsche.

Both companies seemed resigned to forgo the pursuit of big profit margins in return for the elusive "halo effect" a high-performance or trend-setting car can generate.

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Jim Lentz, head of Toyota's North American operations, said Toyota has had good results with that strategy in the past, such as with the retro style FJ Cruiser SUV. But with sports cars demand can disappear quickly after an initial spurt, he warned.

"Not to say that people don't do sports cars because of the halo effect it has for brands. But in terms of the business of selling cars and making money on cars, sports cars don't make a lot of sense," Lentz said.

Hank Lee, vice chairman of Kia Motors, told reporters the sports car concept is part of its efforts to launch another attention-grabbing vehicle after its success with the Soul box car. He said it would decide whether to produce the GT4 Stinger after evaluating consumer response.

The GT4 Stinger, which features Kia's signature front grille, vertical LED headlights and a swooping roofline, is the next logical step in the company's development in the U.S. market, Kearns said.

While over the years Kia has transformed its image from a maker of low-priced cars, it needs more excitement to drive traffic to their showrooms, even if it means sacrificing some profits on producing a sports car, Kearns said.`

"Even if you don't make a huge amount of money, it doesn't mean that it is a failure because the way it changes your image, and attracts a different type of customers that we don't have now," he said.

(Reporting by Nathan Layne and Hyunjoo Jin; editing by Andrew Hay)

[ 2014 Thomson Reuters. All rights reserved.]

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