Kia Oz pushes for tiny Picanto

Geneva International Motor Show

Conventional wisdom suggests now is not a good time to be introducing a light-segment car that could be all but blown away by cheaper rivals from China.

Yet that's exactly the plan for the Kia Picanto, the 3.6-metre car that would fill out the importer's local range below the Rio.

An altogether new model was revealed to the media in Geneva overnight. The new car is larger than the one it replaces and also offers a three-door variant for the first time, in addition to the five-door model on display. It's a more sophisticated vehicle than first impressions suggest; offering, for instance, a UV-reflecting windscreen -- once the preserve of the BMW 7 Series and Mercedes-Benz S-Class.

In Europe, the Picanto will be sold with a choice of frugal engines ranging from a dual-fuel (LPG) three-cylinder, a diesel three-cylinder and a petrol four-cylinder displacing 1.2 litres. What Kia Australia wants under the bonnet of the locally-delivered car, assuming it comes here, is not yet open for discussion.

"We've submitted a business plan for it, "Kia's National Public Relations Manager Kevin Hepworth told the Carsales Network prior to the unveiling of the brand new model in Geneva overnight. "Price is the decider."

The initiative to bring such a small car to Australia is a brave one. Suzuki's Alto is the only car currently available in the market that seems to be plugging along in line with Suzuki's sales expectations since the company adjusted pricing and specification for that model.

Hyundai has its i10 model, being built in India, but the management team there have themselves pointed out the danger in bringing such a small car to Australia, priced around the same as a slightly larger car from China. Hepworth doesn't accept that argument.

"Chinese cars are like the Kias of 15 years ago," he insists. "There's a term that we don't use any more -- 'cheap and cheerful'. I assume the Chery [J1] will not give you a five-year warranty?"

The strategy for the Picanto, assuming the factory gives the Australian arm the go-ahead to sell it here, is to promote the Kia's value.

"The Picanto has to be value-competitive with anything else in the segment," Hepworth explains. By that, he means that in the VFACTS light-car segment -- a notoriously price-sensitive market sector -- the Picanto will offer something in the way of core qualities to offset any perception of price disadvantage.

The market has changed, particularly since the GFC. More than one car company is seeing its repeat business move from large cars to small cars or from small cars to light cars, but where perceptions of the competence of small cars, for instance, have changed in recent times, we argued that the same could not be said for light-car buyers. Light cars are often purchased almost entirely on the basis of price rather than engineering, safety or performance. That could leave the Picanto in peril, against rivals in the same segment.

"Nobody says that about the [Volkswagen] Polo," Hepworth retorts. The Volkswagen is also sold in the light-car segment, but it's what the Europeans call a B-segment car, whereas the Picanto is an A-segment car -- half a class smaller again. Where the Polo is placed at an advantage is its price and market positioning. It's so far above the cheapies in the segment and it looks like a conventional family car or first-driver's car. The counterpoint to this argument is the smart fortwo, which is quite expensive also -- and doesn't sell in anything like the same numbers.

Hepworth's point is valid. The Picanto won't be on a hiding to nothing up against larger, cheaper cars from China now beginning to arrive in Australia if Kia can convince buyers that the Picanto just plain offers more substance.

There's an element of shifting attitudes among light-car buyers -- something not easily done in the best of times -- but as Hepworth says: "Somebody's got to do it."

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