Can the K900 Compete with the Ghibli in the Lease Market?

"Tom McParland" (tommcparland)
02/03/2014 at 09:59 • Filed to: K900 vs Ghibli, Kia, Maserati, Leasing, automatch consulting, articles

Last night's big game ads highlighted two brand new players to the hyper-competitive mid-size luxury sedan market, the Kia K900 and the Maserati Ghibli. This is going to be an interesting showdown in the marketplace. Of course the K900 is aiming more against the established players like the E-class, 5-series and A6, but for the sake of discussion let's look at the two newcomers.

Base price of a K900 is about 60k, while base price of a Ghibli is about 67k. Now 7 grand is nothing to sneeze at and loaded up the Maserati will be around 78k while the Kia maxes out at 66k, so a 12 grand price gap is pretty substantial. But that price differential is really only significant when it comes to purchases, and the reality is most cars in this segment are not purchased, they are leased.

As I have mentioned before, !!!error: Indecipherable SUB-paragraph formatting!!! Residual values play a key role in how much a lease payments will be on a specific car. Now residuals and lease offers for each car have not been released yet on the manufacturer websites. However, with some fun internet speculation we can sort of project how these two cars might play out on the lease market.

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As of now the residual value on a Kia Cadenza is about 59%, if the K900 retains that same residual percentage than a 66k car will be worth about 39k at the end of a 36 month lease. This is a difference of about 27k if divided by 36 you could be looking at a lease payment of 750/mo.

What if the Maserati, given its brand prestige, retains a slightly higher residual value of say 65%, then the 78k Ghibli would be worth about 50k at the end of 36 months. This is a difference of 28k, divided by 36 you could be looking at a lease payment of 777/mo.

Of course, these are just speculative estimates but given that !!!error: Indecipherable SUB-paragraph formatting!!! and the Hyundai Equus, which is, for all intents and purposes the K900's twin is !!!error: Indecipherable SUB-paragraph formatting!!! , I would say we are in the ball-park

So what does this mean? Either Kia is going to have to heavily subsidize those K900 leases, or seriously hope that Maserati's residuals take a big hit. Because I have a hard time believing that folks looking for something different other than ze Germans are going to tell their friends they are leasing a Kia instead of a Maserati. And this comparison is just pitting the two cars against each other in terms of possible payments, we haven't even talked about the !!!error: Indecipherable SUB-paragraph formatting!!!

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Do you think the K900 has what it takes to compete with the Maserati and others without significant incentives from Kia or the dealerships?

My name is Tom and I run !!!error: Indecipherable SUB-paragraph formatting!!! I am a professional car-buying consultant, which means people pay me to help them select the right car (NO YOU CAN'T HAVE A PRIUS) and negotiate with the dealerships to get them the best price. If you have any other questions or suggestions for future posts about the car-buying process please let me know. You can find some of my other posts on car-buying !!!error: Indecipherable SUB-paragraph formatting!!!

You can also find me !!!error: Indecipherable SUB-paragraph formatting!!! and !!!error: Indecipherable SUB-paragraph formatting!!!

(Ghibili photo via Wikipedia. K900 photo via CarsForSpeed.com)

DISCUSSION (43)

El Relámpago(LZone) - Humanity First! > Tom McParland
02/03/2014 at 10:02

No, dude, is a fucking Maserati, and that badge, for car guys, is worth more than a BMW and Mercedes badge, not to mention a Kia badge, and I doubt the Kia will drive as well and sound as good as a Maserati. Ever.

Or at least this fucking century.

Brian Silvestro > Tom McParland
02/03/2014 at 10:04

I don't they're necessarily going to compete with each other because of the customers they're trying to sell to. The Maserati is aimed at young people who want a cool, hip Italian car, while older people want something more comfortable, quieter, and reliable.

Tom McParland > Brian Silvestro
02/03/2014 at 10:06

Maybe...but the old people are going to get the Cadenza. Kia wants the E-class buyers and when those E-class buyers find out they can lease an Italian car for similar money as the Korean one, Kia is going to have a problem.

ssidd47 > Tom McParland
02/03/2014 at 10:07

The K900 lacks one of the most important features needed to compete in the luxury market: prestige. What do you think when you first think Kia? Economy level cars. Lux auto buyers are more likely to place brand name ahead of the car. For about 60k, why have a Kia if you can have something nicer?

In fact, even if Kia subsidises the K900, why would someone want the K900 over a C-Class, 3-Series, or A4?

RW53104 > Tom McParland
02/03/2014 at 10:08

Just promise us here on Oppo that you'll push the Maserati, yeah?

Party-vi > El Relámpago(LZone) - Humanity First!
02/03/2014 at 10:10

"that badge, for car guys, is worth more than a BMW and Mercedes badge"

Car guys don't lease Maseratis. Regular consumers do.

Brian Silvestro > Tom McParland
02/03/2014 at 10:10

First of all, I think Kia had a problem as soon as they decided to put a Kia badge on a $60k luxury car. Sorry, it's just how the auto world is gonna take it. Secondly, I think older people will like the concept of owning an Italian fast car, but once they drive it and realize the semi-stiff suspension and loud exhaust, they might change their minds.

FJ80WaitinForaLSV8 > Tom McParland
02/03/2014 at 10:11

I honestly think that Kia is going to have an extremely difficult time moving $60,000 car. Very few people are going to take that plunge because Kia.

For reference, Hyndai (which has been selling the Equus since 2010) only sold 3,578 of the Equi in 2013. Compare this to 32,000 Cadillac XTS, 13,000 Mercedes S Class, 11,000 BMW 7 series, 5,421 Porsche Panamera, and 5,300 Audi A8s. The luxery market is a brutal segment and this is going to take quite a while for kia and Hyundai to place them selves on that segments short list.

Tom McParland > FJ80WaitinForaLSV8
02/03/2014 at 10:14

Those are some interesting numbers for comparison, thanks!

El Relámpago(LZone) - Humanity First! > Party-vi
02/03/2014 at 10:15

Of course they do. we're not all rolling in cash, to buy Maseratis, money down. Or at least not in that much...

WolfmanJimCBW > Tom McParland
02/03/2014 at 10:19

The only concern I see with the Kia is that its name isn't going to hold value as long as the people int wants to compete with.

Goshen, formerly Darkcode > Tom McParland
02/03/2014 at 10:20

I can't believe we're comparing a Kia with a Maserati. I know they're in the same market class but I'm struggling to put both brands in the same pot.

Party-vi > El Relámpago(LZone) - Humanity First!
02/03/2014 at 10:20

I'd say a Mercedes badge or BMW roundel is worth more to me, considering those companies didn't take a massive shit in the 1980s and 1990s. Don't get me wrong, I love Maserati, but those two decades are a stain on what was once one of the most prestigious badges in the world.

John Bulzacchelli > Tom McParland
02/03/2014 at 10:21

I honestly think Hyundai/Kia should have launched Genesis as a sub-brand (ie Lexus, Acura, Infiniti). That is the only way they are ever going to be able sell an upscale halo car.

No one wants to answer "Uh, I drive a $60k Kia"

AM3R > Tom McParland
02/03/2014 at 10:26

I think Kia is gonna have trouble moving $60k cars around the lot... Especially if people find out $7k more can get them a Maserati.

No one else is seeing how this is similar to the Phaeton? Sure, you get a nice car, but it's still wearing a badge that's usually found on boxy cars driven by hamsters. The people who shop for luxury sedans at this price point would likely rather spend more and get the Maserati, or spend less and get a CPO'd 7 series or S-class. People don't see Kia as a luxury brand.

They also haven't done much to make the K900 attractive to younger buyers. I mean they literally had an older guy in the commercial for the K900 which was a huge mistake. That's the first time many have actually seen a K900 and paid attention to it, and now they think of it as their dads car.

m4ximusprim3 > Tom McParland
02/03/2014 at 10:27

Assuming we're talking about retiring baby boomers who want a luxury car but can't really afford to buy one, I think the K900 might hold its own pretty well.

The Ghibli is a better car for the money, but I guarantee if you put my dad out for a test drive in each one, he'd like the Kia and complain that the ride on the Ghibli is too hard and the exhaust was too loud.

BJ > Goshen, formerly Darkcode
02/03/2014 at 10:31

It's all about the name. As John mentioned in another comment , they should should have launched this as a sub-brand to build up recognition.

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What if Nissan didn't have Infiniti? Would you buy a Nissan-branded Q60 convertible sports car for $55k+ base price? Not likely. But the Infiniti name carries a certain expectation, a certain cachet , so you're likely to consider it.

Goshen, formerly Darkcode > BJ
02/03/2014 at 10:32

Or they should have released it under the Hyundai brand, which is at least remotely close to be able to pull this.

BJ > Tom McParland
02/03/2014 at 10:34

If they want to sell or lease these cars at that price, they need to drop the cheap-looking fake fender vents. The rest of the exterior looks classy enough, but those vents... Ugh.

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > Tom McParland
02/03/2014 at 10:47

All I know is that the Maser's exhaust note alone is worth the $70k price of entry.

If I had that kind of cash, I'd get one just for that.

Tom McParland > m4ximusprim3
02/03/2014 at 10:49

Most of the reviews have said the Ghibli's ride is pretty impressive and a nice balance between comfort and sport.

SpikeFiend > FJ80WaitinForaLSV8
02/03/2014 at 11:00

On the other hand, would you even think to consider Maserati as a viable choice if you were looking for a car in the $70k price range? Just by the brand name, I don't think it would be on anyone's radar.

Victorious Secret > Party-vi
02/03/2014 at 11:15

A birdie on the street told me that Maserati's future depends on the next 3 years and how well they do in America.

The little bird being a dealer principal for Ferrari.

Those two decades RUINED their goodwill outside of the enthusiast circle. And we all know we enthusiasts mean nothing for sales in the long run.

Mattbob > Tom McParland
02/03/2014 at 11:17

Maybe I'm a bit out of date, but... What kind of Hell am I living in where a Kia is $60,000???????????????????

Victorious Secret > Tom McParland
02/03/2014 at 11:17

Nope.

Compare the kind of dealer experience, that alone will ensure Kia never successfully markets the K900.

When the Ghibli came out, out dealer DROVE THEM UP to our freaking city and had a test drive/purchase day. In the midst of coffee and general car chat, a dealer came to US to give us a chance at the car.

That is what Kia needs to do. That is not what Kia is capable of doing.

I'm sorry for Kia, but badges matter in this segment. The badge is everything. Their badge has no equity in this segment what so ever. They will need some time before this can be a valid fight.

FJ80WaitinForaLSV8 > SpikeFiend
02/03/2014 at 11:17

I agree with you. Fiat also has a ways to go although I think being a boutique italian brand makes it easier.

Tom McParland > Victorious Secret
02/03/2014 at 11:18

Agreed, I think more than anything else the dealer experience will sink Kia in the luxury market. Caddy has this problem as well.

Victorious Secret > m4ximusprim3
02/03/2014 at 11:19

The Ghibli is anything but hard and loud when you don't want it to.

Its quiet and comfortable 99% of the time. hell 100% of the time for people who want it like that.

For those that want sporty, press two buttons and it becomes a verifiable animal that no Kia would dream of becoming.

Victorious Secret > BJ
02/03/2014 at 11:19

Yea but fake vents are hip and cool, right?

Come on, I was always told that.

dg723 > Tom McParland
02/03/2014 at 11:39

The BASE Ghibli(no navigation, rear wheel drive) leases start at $1000 a month with no money down(taxes and fees paid up front) Residuals are low 50s and the interest rate is near 5%....

Tom McParland > dg723
02/03/2014 at 11:43

And if you didn't put any money down on the K900 it would be ridiculous as well. Here is one advertised for 799

Kinja'd!!!

Group B-raaaaaaaaaap! > Tom McParland
02/03/2014 at 11:46

From an apples to apples technology/engineering/value-statement comparison, this is interesting. But once you add the indefinable (but incredibly pertinent) value of Brand Cache, the comparison ends there.

But for the real crux of your article (which judging by the comments it looks like a lot of people missed the overall point), we'll have to see where the Ghibli lands on the RVLG, and what FCA can do in the US to leverage it's position with Chrysler Capital as it's captive lender. Even un-subvented, the CC Standard Money Factor is .00183 (4.39% APR in human terms). And as you had mentioned, a 65% 36 month residual is not out of the ballpark for that brand. So the numbers add up.

At the end of the day, however, the K900 is a very expensive exercise to draw shoppers in to look at Optimas, Cadenzas, Sportages, and Sorentos. Where it will be most competitive is for the "credit-challenged" who can't afford to get into party at Maserati (or BMW, Mercedes, Lexus, Infiniti, etc.). There is not a doubt in my mind that KIA will have to subvent the shit out of these units to get them on the road. The other thing working against the K900 is that they have absolutely no skin in the luxury CPO game. CPO is a segment where luxo brands (and near-lux, I'm looking at you, Acura) are incredibly dominant. For the dealership networks, most of them are into the luxury brands simply for the CPO side. There is little to no money in selling new Beemers and Mercs, but those Certified rides are solid GOLD. KIA just doesn't have that skill set, and that will be the undoing of the K900.

Will it lease? Yeah, to the same crowd that at least bought what few Amantis were sold a decade ago. Will it be a success? That's a relative term. If success means not sinking the marque, then the answer is "likely", but if success means taking the Ghibli's, 5 Series', F-Type's, or A6/A8's lunch money then it is an honest and sincere "Nope." They will subvent it to death, and after 3 model years it will be relegated to the dustbin of failed historical attempts along with the Amanti and VW Phaeton.

dg723 > Tom McParland
02/03/2014 at 11:56

$6600 down PLUS taxes, first payment, mandatory security deposit, bank fee.. and the car has no navi ..... not much of a deal

Tom McParland > dg723
02/03/2014 at 12:02

None of the cars in this segment are a "deal"

dg723 > Group B-raaaaaaaaaap!
02/03/2014 at 12:05

ghiblis residual is low 50%, rate is around 5%...

Textured Soy Protein > Tom McParland
02/03/2014 at 12:31

The Equus & K900 are for people who want a big luxo barge but also either A) don't care about brand prestige or B) actively want to avoid driving a snobby car.

People like B) actually exist, because I'm one of them. But I drive a BMW because I like the car enough to get over the fact that it makes me look like an asshole. I just get slightly embarrassed when I tell people I drive it.

The Maserati is for people who want something that's even more exclusive than something like a BMW/Mercedes/Audi/Cadillac/Lexus/Jaguar etc. Because saying "my Maserati" is always going to sound fancier than any of those other luxo brands.

ktonl > Tom McParland
02/03/2014 at 12:53

ghibli is mid sized? looks compact to me. the K900 looks like a large sedan as well.

Tom McParland > ktonl
02/03/2014 at 12:56

Ghibli is about the same size as a 5-series, the K900 is bigger probably in-between a 5 and a 7

FireSpittingV12 > Tom McParland
02/03/2014 at 22:23

LOLKia.

No.

Maserati is in a TOTALLY different league.

samssun > Goshen, formerly Darkcode
02/04/2014 at 07:13

It does seem odd, but Kia is trying to move upmarket at the same time Maserati is trying to move downmarket, so there you go.

ragingpandabear > Tom McParland
02/06/2014 at 01:09

I forsee Phaeton redux. K900s (awesome name btw if you like dogs. And robots. AND I DO) being blown out for sitting on the lot for 6+ months and having the resale value of a new Kia Sedona after 24 months.

Suuuubaru > Victorious Secret
02/10/2014 at 19:11

You'd think they'd learn from the mistakes of VW and their Hyundai stablemates..

Kate's Dirty Sister > Tom McParland
02/11/2014 at 15:17

The Ghibli might have a harder time fighting against its cheaper and more powerful sibling.

Kinja'd!!!