Kia's task: Make sure the boxy Soul avoids a Scion-like swoon

Will the Kia Soul be able to sustain its strong sales start?

LOS ANGELES -- As Kia prepares to launch a redesigned version of the hot-selling Soul this fall, it could learn a lot from its peers in the boxy small-car segment.
Specifically, it could learn what not to do.
The funky but unassuming Soul helped to put Kia on the design map when it debuted in 2009 and has since become a cornerstone of the brand, far exceeding the peak annual sales of peers such as the Scion xB, Nissan Cube and the now-discontinued Honda Element.
Soul sales first topped 100,000 units in 2011 and hit a record of more than 115,000 last year, accounting for a fifth of Kia's U.S. volume. The Soul was the best-selling subcompact car in America last year, beating out more mainstream competitors such as the Ford Fiesta, Nissan Versa and Honda Fit.
But other boxy cars had strong starts, too, only to lose momentum as they aged. Given the importance of the Soul to its overall volume, Kia needs to avoid that curse with the coming redesign.

Hobden: Prices draw traffic.

It's critical that they got it right," said Don Hobden, chairman of Kia's dealer council, who has seen the redesigned Soul. "And I believe with all my heart that they did."
Hobden, managing executive of a dealership group called The Kia Store, which owns six Kia stores in Kentucky, Alabama and Indiana, hopes the fall launch will spark a sales turnaround for the brand, which posted a 4 percent decline in U.S. sales through the first half of 2013.
Boxy cars such as the Soul occupy a peculiar niche in the car industry, catering to young, cost-conscious consumers with lots of stuff to haul.

Soul ascendant

"They were developed under the premise that younger buyers have very active and varied lifestyles," said Ed Kim, vice president of industry analysis at consulting firm AutoPacific. "And nothing could be more flexible to the target buyers' diverse needs than a box."
Honda pioneered the genre in 2002 with the Element, a crossover with a cavernous interior, easy-to-clean neoprene seats, washable floors and lots of plastic inside and out. But it was the vanlike, low-riding Scion xB that defined the category when it hit the streets nearly a decade ago, with nary a curve in its profile.
"It looked like it came straight from the streets of Tokyo, and that made it cool," said Kim. "At the same time, it was more than just a one-trick pony. It wasn't just novel, but was incredibly practical."
But after a few years of strong sales, each vehicle faltered, and for different reasons. Kim says the Element grew stale, getting only minor updates during its nine years on the market, and Honda curtailed advertising for the car. It was discontinued in 2011.
The xB, meanwhile, changed too much. It stumbled badly after Scion redesigned it for the 2008 model year as a larger, more rounded and more conventional vehicle. The brand has struggled ever since.
"Everything that was cool about the first one, they basically got rid of it," Kim said.
Nissan's Cube joined the fray in 2009 and never caught on. "The Cube was just a little too weird," Kim said.
With the Soul's 2009 launch, Kia picked up where the original xB left off. Kim calls the Soul "the true successor to the first-generation xB," because of its edgy styling, utility and available features such as a navigation system, Bluetooth connectivity and ambient lighting that changes color and pulsates to the beat of music from the audio system.

Some small, boxy cars had sales declines after sizzling starts in the market. Clockwise from top, the 2004 Scion xB, 2011 Honda Element, 2013 Nissan Cube and 2013 Scion xB.

Jon Osborn, research director at J.D. Power and Associates, says the Soul has proved its practical appeal as well. According to the firm's Avoider Study, fuel economy, warranty, low price and exterior styling were the most frequently cited reasons why consumers chose the Kia Soul over the Scion xB or Nissan Cube.
The redesigned model, he says, will have to improve on the original without fundamentally changing it. "You don't want to mess too much with a good thing, but they do need to keep it fresh and attractive," he said.
The 2014 Soul's exterior styling changes are subtle, updating the look while maintaining its distinct proportions and overall design aesthetic. Inside, soft-touch materials on the dashboard, center console and door panels replace the hard plastics that are liberally applied to the current model's interior.
Said Kim: "I think the second-gen product has remained true to what the target buyer wants, and that's what the second-generation xB did not do."
Still unclear is how those improvements will affect the Soul's prices. Kia officials declined to comment last week on the coming redesign.
Hobden, the dealer council president, says the current Soul's low base price and affordable lease payment are key local advertising messages that drive traffic into his Kia showrooms.
"When we can advertise that car at $14,900, it serves a niche and it draws traffic," he said. "But the thing that adds value is the residual value and the lease payments that we can advertise."...