No free kicks for Chinese brands

No free kicks! That’s the policy at Kia Australia as it defends its sales success against increasingly popular Chinese brands.

While market leader Toyota and other top 10 brands like Mazda and Ford have intentionally priced themselves out of the entry-level part of the new vehicle sales market, helping Chinese brands such as MG establish themselves with cheaper prices, combative Kia Australia chief operating officer Damien Meredith says the Korean brand won’t be doing the same thing.

“Whether it’s a game of footy or cricket, you don’t want to give your competitors a free kick or four byes,” Meredith told carsales. “So you have to make sure you are developing both the top end and protecting the bottom end.”

The rocketing rise in price of models such as the new-generation Toyota Yaris has opened the door locally for SAIC-owned MG and LDV, plus GWM and Haval.

The MG3 was the best-selling mini-car in 2020, rising from eighth in the category in 2019 with a 78 per cent boost in sales. Its pricing starts at $16,990 drive-away.

With the HS and ZS small SUVs also providing impetus, MG sales rose 83.2 per cent to 15,253 in 2020.

Commercial and SUV brand LDV shot up 43.9 per cent to 9323 sales, SUV specialist Haval was up 93.1 per cent (to 3294 sales) and Great Wall/GWM rose 38.5 per cent to 1941 sales.

A big story in 2021 will be the GWM Ute which has just launched in Australia. By far the best pick-up to come out of China, it has substantially narrowed the quality gap to the market leaders such as the Ford Ranger and Toyota HiLux while undercutting them on price by tens of thousands of dollars.

“We are well aware of it [the increasing presence of Chinese brands] and I think what’s happened not only with Toyota’s pricing strategies – but other manufacturers too – is if you move up quickly there is a tendency to allow other manufacturers to move into that vacuum that’s been created and they can put their tent up and put it up very, very well,” Meredith said.

“We are very aware of that and when that occurs – and it has occurred – what you have to do is make the top side of your business … about brand and quality product, making sure your vehicles are well specced.

“You have to strengthen the top side of your business and still to a degree protect your bottom side.”

On the ‘bottom side’ Kia has retained presence in the mini-car market with the Picanto (priced from $15,190 plus on-road costs) and Rio that starts at $18,590 plus ORCs.

It is strengthening its ‘top end’ with new-generation models such as the Kia Sorento and Carnival.

Kia finished 2020 down 8.8 per cent in a market down 13.7 per cent. It sold 56,076 vehicles in 2020 and has eyes on a record 65,000 in 2021. It was the sixth most popular brand in Australia last year.

“If you look at what we have done we have not abandoned our passenger vehicles in micro and light, we have kept that going,” said Meredith. “Our market share has been exceptional in those areas, but we’ve also strengthened the top end of our business.

“So at the top end we are a lot stronger and I think we have maintained our bottom end quite well so we haven’t been attacked as greatly by competitors from other areas of Asia as much as other [brands].”

Toyota Australia has pointed to increasing the safety inventory required to meet five-star ANCAP ratings as a reason for its Yaris price rise. It has started promoting its certified used car program for buyers unable or unwilling to spend the $25,000-plus now required to get into a new Toyota.

Toyota Australia sales and marketing chief Sean Hanley told carsales he was confident Toyota’s revised positioning was correct.

Toyota sales dipped only 0.5 per cent in 2020, although Yaris fell 49 per cent and its other small passenger car staple, Corolla, fell by 15 per cent.

“People are prepared to pay for the extra technology and the extra safety,” he said. “They are seeing that. I think Toyota’s value proposition is correct.

“There is a market sub-$20,000 and we believe it is a used car market and a good quality used car market. That is why we are launching our Toyota certified used car strategy.”

The Chinese represent the latest new wave of car manufacturing countries to establish themselves on Australian shores. The Japanese brands went through the same process in the 1960s and 1970s and the Koreans in the 1980s and 1990s.