Cost dictates Kia Cerato ANCAP rating

Kia has previously been caught out by an ANCAP rating, but this time there was no surprise. ANCAP's dual rating for the latest Kia Cerato was seen coming a long way off by Kia Australia.

"We aimed for it... no secret... and it's what we achieved," Kia Australia product planning chief Roland Rivero told local journalists during the launch of the Kia Cerato hatch and GT models last week.

The basic Kia Cerato S and higher-grade Cerato Sport earned just four stars in ANCAP safety testing, but the upmarket Kia Cerato Sport Plus and the new GT flagship did finish with a five-star rating from crash safety authority ANCAP – the Australasian New Car Assessment Program.

According to ANCAP, the lower-priced models lacked the standard safety-assist technology that would have earned the Cerato a five-star rating. This bundle of primary safety features – such as autonomous emergency braking (AEB) with pedestrian and cyclist detection – is an extra-cost option priced at $1500. The Cerato does feature AEB, but without the road user detection.

"The project plan, or the model line-up plan and the spec plan was always targeted that way," Rivero continued.

"With the dual rating, effectively what we wanted to do was make sure that our price-sensitive entry variants gave the customers choice.

"So you can still make [a Cerato S or Cerato Sport] a five-star vehicle, once you opt to add... AEB, blind spot detection and rear cross-traffic alert. But for variants like Sport Plus and the GT, effectively less price-sensitive, we can put the whole lot in there."

Asked by carsales.com.au whether that placed the onus on sales staff to upsell the driver-assist technology to the customer, Rivero replied that the choice rests with the customer.

"We can do our best to train our dealers to push in that direction," he said, but noted that it was "the customer's choice". Furthermore, only 26 per cent of buyers for the Cerato S and just 20 per cent for the Cerato Sport are prepared to pay for the safety pack.

And further to that, as Rivero subsequently advised carsales, most of the uptake for the $1500 safety pack option came from fleet buyers rather than private buyers. The implication is clear – at this level, private buyers are looking for every way possible to save bucks... and that includes skipping the sort of safety technology that could save a life.

Rivero also explained that Cerato buyers are more likely to specify the safety equipment in the range if they're purchasing a mid or high-spec model, such as the Cerato Sport Plus or GT. Prior to the safety equipment being made standard in the Cerato Sport Plus trim level, up to 50 per cent of buyers were opting for it anyway. That implies that Kia might make the option standard in the lesser models with the same percentage of take-up.

"I would say at this stage there may be room for rationalisation in the future, and the market will really determine whether [that happens]," Rivero acknowledged.

The Kia executive refuted that the marketing of the car with a safety pack rather than standard equipment across the board was a product planning experiment.

"We were keen... to protect the price point; we had a value proposition that we wanted to make sure we achieved for our S variants in particular, from a retail perspective. It was a balancing act, ultimately."

Would the factory come to the party, lowering the landed cost and including the safety pack as standard?

"Believe me, when we haggle for pricing, we go in hard," Rivero answered.

"Our intent is always to offer the best-value proposition to our customers. And they want to sell it to us at the highest price to make the most margin, so there's always that debate."

Rivero says too that Kia's elevation to number seven in the Australian market during 2018 (up from nine the year before) has strengthened the importer's negotiating position with the factory.

"We don't hold anything back when it comes to negotiating price," he reiterated.

The Cerato (in any variant) was tested by ANCAP in 2018, but the date stamp is actually 2019, which is due to the 2019 protocol being "a carbon copy" of the 2018 protocol, Rivero advises, and the final testing and promulgation of results spilling over into 2019.

Rivero's colleague Kevin Hepworth – Kia Australia's Media & Corporate Communications chief – took the discussion along a different path, noting that it was incumbent on the media to explain to buyers why they should find the cash for the high-tech safety pack.

"At this point, you guys have the unenviable job of trying to educate the public as to why the current [ANCAP-rated] four-star car is safer than a five-star car from 12 or 18 months ago.

"It's the most complex thing that's ever been put into the Australian automotive industry. We have trouble understanding it, and I'm sure a lot of people in the public do, but it behoves you guys to try and explain how and why this sort of programming and changing of the goalposts – if you like – benefits the public when they can look at something and say: 'Okay, we're going to buy a five-star car', when in fact that is less safe than a modern four-star car.

"That's something you've got to look forward to."

According to Hepworth: "You've got to look at the structural safety of the car as well – which is exceptionally high.

"It scored very highly in passenger front and rear safety. The shortcomings – if you like, if you want to use that term – are in technology that rewards driver inattention."

There are older examples of brands caught in this sort of dilemma, with Mazda forced to offer stability control as a safety pack option in its bargain-basement Mazda2 during the years prior to the Victorian government mandating the safety feature for all passenger cars in 2011.

In Kia's case, the pressure to upgrade safety in its affordable cars comes from ANCAP rather than government, but it's still pressure.