Kia expects SUVs to dominate in 2016

Damien Meredith, Chief Operating Officer at Kia Australia, says that SUV sales will slide past passenger car sales in our market this year.

"We're pretty positive that SUV sales will overtake passenger vehicle sales for 2016," Meredith told local journalists during the launch of the Picanto micro hatch earlier this week.

The rise of the SUV in the Australian market has been rapid, although the growing share for SUVs is exacerbated by the offset decline in passenger car sales. Last year, with 35.4 per cent of the total market, SUVs had increased share by 3.7 per cent, but passenger vehicles, with 44.6 per cent of the market, had headed backwards to the tune of 3.1 per cent.

A year earlier, passenger vehicles had represented 47.7 per cent of the market, and in 2013 passenger cars had dropped from over half (51.7 per cent) in 2012 to 49.9 per cent. So the decline has been steady and utterly predictable. In 2012 as much as 27.6 per cent of the market comprised SUVs.

Ironically, SUVs have become progressively more popular as they have become softer and more like passenger cars. In 2001 SUVs – or all-terrain wagons as they were at the time – were purchased by just 15 per cent of the market. At that time there was no such thing as an 'all-terrain wagon' with just two driven wheels. Since the introduction of Ford's Territory in 2004, two-wheel drive SUVs command a substantial component of the aggregate sales – the majority, in the case of the Territory.

The growing demand for SUVs in 2016 will help push the market to a new record, says Meredith.

"We're of the view [that] this year – the market's up nearly three per cent – we believe the market will be 1.19 [million]..." Meredith also said, and noted too that some of the portents of doom in and around the industry are actually unsustainable.

"The market's still very robust, still very strong. We're confident that it will continue to grow. There are obvious variables that are in play. Affordability, obviously, is a big one. Certainly the economic situation is still quite strong, so we're in pretty good shape to do about 1.19 million."

That would be around three per cent growth, year on year, if it comes to fruition. Kia itself intends to do better still – by a considerable margin.

"We'll sell 39,000 cars in 2016," Meredith said. "That's a jump of nearly 16 per cent, year over year. For the first quarter we're at 9549 sales. That is up 21 per cent."

The projected sales will tail off later in the year due to the manufacturer's inability to meet demand, Meredith explained.

"Simplistically, our quota of vehicles that we can get from Korea is built around that 39,000 [figure]. If we can get more, we may sell a few more. Right now we're calling 39,000 for 2016.

Such sales growth would result in market share of 3.3%. That's a more-or-less arithmetic progression from the importer's market share of 2.5% in 2014 and 2.9% in 2015.