In recent years, Kia has significantly increased in popularity. There are a number of reasons for this success, including attractive styling, high-quality designs, and many safety features. Also another reason for the success of Kia car models is that they are so cheap compared to many of their competitors. Why is this? There are three primary reasons.
Why are Kia cars so cheap?
Kia wasn’t always a successful company. For much of the 1990s, the South Korean automaker struggled to stay afloat. However, this changed in 1998 when Hyundai bought Kia. After that, the quality of Kia vehicles and the automaker’s finances started to improve. While both brands operate independently, Hyundai is the parent company, with a 33% ownership stake in Kia.
Kia car models are so cheap compared to other automotive brands for three key reasons. The Hyundai connection directly influences the first two:
- Kia and Hyundai are the only two automakers that use their own foundry
- Kia can import its cars to the United States without paying a tariff
- For the manufacture of its vehicle, Kia doesn’t use expensive metals and plastics
Kia saves money on the manufacturing cost of its cars by using its own foundry
The metal portion of a car is a big factor in its cost. Other than Kia and Hyundai, all other automakers have to outsource the metal from an external supplier, which is expensive. This expense has been made even higher in recent times with global supply chain issues and high inflation.
However, Kia and Hyundai don’t have to outsource the metal for their vehicles. They own a foundry, which is a factory that produces metal castings. This helps make Kia cars inexpensive.
Kia cars are so cheap due to the ability to import vehicles to the US tariff-free
The second reason why Kia cars are so cheap is the automaker can import vehicles to the U.S. without paying a tariff. How is this possible? Most of Kia’s plants are in South Korea. However, it has one plant in the U.S. — the Kia West Point Assembly Plant in West Point, Georgia. Currently, only three Kia models are built at the West Point Assembly Plant: the Telluride midsize SUV, the Sorento compact SUV, and the K5 midsize sedan.
Most of Kia’s other models are built at plants in South Korea, where production is cheaper than in the U.S. Even though Kia only has one plant in the U.S., that’s enough to make the automaker exempt from paying a tariff. With lower manufacturing costs and no tariffs, Kia makes its cars more inexpensive compared to its competitors.