Kia boss foresees market flux in 2018

Kia plans to remain a fixture in Australia's top 10 car companies, measured by sales. And the Korean brand's improving fortunes could mean serious trouble for other, longer-established brands.

"We're pretty confident that there'll be growth for us next year..." the brand's Chief Operating Officer, Damien Meredith, revealed to local journalists yesterday. Meredith expects the market overall to hold steady. That doesn't mean there won't be some changes to the complexion of the VFACTS top 10 though.

Toyota is unlikely to relinquish top spot, even with the big-selling Camry moving from local production to full importation. Despite a sales decline in 2017 for the year to date, Mazda looks unassailable in second spot. Hyundai has also lost ground in 2017, but appears to have a lock on third place for 2018.

Holden (fourth) and Ford (fifth) have also lost sales so far in 2017, but where Ford has lost less than 1700 sales from January to October, year on year, Holden sales have dived by over 8000 units. And unlike Ford, it's yet to face the challenge of its first year as a full-line importer. Depending on whether Ford can maintain the sales rate for its Mustang and Ranger models – and possibly improve sales of the other passenger cars in its range, it could push past Holden next year, into fourth spot.

Mitsubishi, currently in sixth, represents a real threat to both Holden and Ford. Less than 1300 sales behind Ford for the year to date, Mitsubishi has picked up over 4000 more sales in 2017 so far. It's not inconceivable that Mitsubishi could overtake both Holden and Ford for fourth place next year.

One question mark over Mitsubishi's future is the aging Lancer, which has contributed nearly 10 per cent of sales in 2017. The importer is understood to have stockpiled its small car, but how much stock it has and how long that stock can last into 2018 remains uncertain since Mitsubishi officially announced the end of Lancer production in Japan.

Volkswagen sales are less than 400 units clear of the same period in 2016, despite the introduction of an all-new Tiguan and an updated Golf. Sales are hampered by supply constraints, according to the brand's local management, but to get anywhere near Mitsubishi's 64,955 sales for 2017 to date, and move out of seventh place, Volkswagen (47,504 sales to October 2017) would have to find another 16,000-plus sales in 2018, assuming Mitsubishi's upward trajectory continues.

An opportunity for Kia – currently in ninth place – to move up a rung results from Nissan's sales decline without small and light passenger cars. As of the end of October, Kia (46,425 vehicles sold) was just 500 units behind Nissan (46,936 vehicles sold, year to date). In 2017, Kia has sold over 10,000 more vehicles so far than during the same period in 2016.

By contrast, Nissan's sales have dropped away by over 8500.

Small targets
Damien Meredith argues that companies remaining in small and light car segments of the market will reap the benefits as other companies vacate those same segments, particularly small cars. Nissan is one obvious example.

Meredith hints that Kia will finish 2017 ahead of Nissan and just behind Volkswagen.

"They [Volkswagen] will probably beat us by 400, 500 cars," Meredith predicted. "We're not going to do anything silly to chase them down like that."

With new product just arrived (Stinger) or on the way (Cerato), Kia stands a chance of at least staying in touch with Volkswagen in 2018. Subaru is 10th on the ladder and currently about 2000 sales behind Kia. Depending on how Nissan fares in 2018, Subaru could move up to ninth.

"Kia, Subaru, Honda – all that 8, 9, 10, 11, 12 placement – I think they can probably get a bit of incremental business out of General Motors, and maybe a little bit out of Ford," says Meredith.

Kia's performance in the market has been consistently trending upwards, which boosts the brand's confidence in itself. Arguably, it's easier to move up (or down) in the lower half of the top 10, where sales are more closely contested.

"We've grown 25, 27,000 cars in the last three years. Hyundai have been bouncing around about 100,000 for the last three years..." Meredith explained, drawing on Kia's parent company as an example.

Cerato renewal providing a boost
His upbeat view arises out of the success of the Stinger large car and the looming introduction of the all-new Cerato during 2018.

"Mid-way through the year we'll have the [Cerato] sedan, and a couple of months later we'll have the hatch," he stated.

"We're pretty confident that we'll be able to do 20,000 [sales of the new car]."

With just two months of sales remaining in 2017, the existing Cerato has sold nearly 16,000 units, so 20,000 is not an over-optimistic forecast, but does indicate that Kia expects to manage run-out of the current model and ramp up sales of the new model with little interruption to sales momentum.

"It's obviously a complete new design," Meredith said of the coming Cerato. "I think you'll find that the safety spec at entry level... and connectivity will be right through the range."

The new model will share some DNA with the Hyundai i30 and Elantra. Meredith's words hint at AEB as standard across the range – which has to be a given, against Mazda3 – and Apple CarPlay/Android Auto also as standard. Once again, that's to be expected, with the new i30 featuring both connectivity apps in the entry-level Active grade. What's more, Kia is currently negotiating with the factory for the Cerato to arrive here not only that well equipped, but also at a highly competitive price.

"What we have to do is make sure that as a brand in Australia we fight hard to get the right pricing in for our product and our brand at that level. Simple as that...

"Do we want a sub-$20,000 car in the new PD range, yes we do."

Stinger the brand hero
Although sales for the moment are hovering around 200 cars a month, the Stinger has already injected some additional excitement into the Kia brand image, and that is translating to more profitable sales for Kia, says Meredith.

"Since Kia Stinger has come into play, over 10 per cent of our sales are over $60,000. That's Sorento and also Carnival [as well as Stinger]."

Asked whether there is a danger that consumers begin to see the Stinger as a 'Stinger' first and a 'Kia' second, Meredith answered: "Well, I spent 20 years at Honda, and there's no doubt that people looked at Civic first and Accord first – and then at Honda."

That's not a bad situation for a brand, says Meredith. But currently it's academic for Kia and the Stinger anyway.

"I've spoken to hundreds of people, who've said: 'Mate, seven-year warranty… why wouldn't you buy it?!'

"And then they say: 'And it's a great car'.

"What we've got to do is flip that and people have got to say: 'It's a great car, and by the way it's got a seven-year warranty.'

"That's the challenge over the next five years."

Who knows where Kia will be on the VFACTS top 10 ladder by then?