For a long time, the only brand with a poorer reputation than Hyundai was Kia. Despite being a subsidiary of Hyundai, Kia's vehicles were often a grade lower in quality, using decade-old Mazda engineering and projecting an image of cheap vehicles for those with poor credit (or poor taste).
Now, Kia is on a roll, with sharp designs and technology borrowed from Hyundai, which has become a segment leader in many respects. Kia's Optima sedan is outselling the Hyundai Sonata in their home market of South Korea, something few would have predicted even a year ago.
Executives at Hyundai fear that sales cannibalization will occur if action isn't taken to differentiate the brands. Hyundai is said to become the more premium, upscale brand while Kia will take on a sportier image. In the United States, the company's lineups have a lot of overlap, but in the rest of the world, more differentiation exists, and Kia and Hyundai have established dominant positions in different reasons.
More: Hyundai, Kia To Establish Distinct Brand Identities