Kia's sales are sputtering after a period of explosive growth that saw it threaten the market share of major shareholder Hyundai, and profitability has also deteriorated.
Analysts say Kia relies too heavily on domestic factories for production, while sales of its K7 and K9 premium sedans have been lackluster. A much slower rate of new releases compared to Hyundai and the lack of an energetic CEO are also negative factors, analysts said.
An even greater problem is that there are no signs that these problems are being addressed.
Kia's cumulative earnings so far this year, announced on Oct. 25, clearly demonstrate the dire situation. Global sales rose only 3.3 percent, compared to 9.9 percent at Hyundai. That is even lower than the 3.9-percent growth in new car demand around the world this year.
Revenues rose a paltry 0.4 percent, while operating profit fell 19 percent.
"Hyundai makes four out of 10 cars in Korea, but Kia makes six," a Kia staffer said, adding that the strengthening won could severely impact its overall sales.
Hyundai has manufacturing plants in Brazil, China, the Czech Republic, India, Russia, Turkey and the U.S. But Kia only has overseas plants in China, Slovakia and the U.S., and other than the construction of another plant in China, has no plans to expand its overseas production capacity next year.
Im Eun-young at Dongbu Securities said Kia was "left out" of Hyundai's push to build overseas manufacturing plants, while Kia's flagship K series of premium sedans has done poorly, causing investors to doubt the carmaker's growth potential.
While Hyundai plans to release a new Genesis premium sedan next month and a new mid-sized Sonata passenger car in the first half of 2014, Kia is not launching a new model until the second half of next year.