Uphill for Kia but new models should renew fortunes

Like its Hyundai sister range, Kia is facing tough times Down Under. Around eight per cent down compared to its 2006 sales at the mid-year, the company is mirroring its stablemate's fortunes. But execs at the wholly company-owned operation are upbeat, claiming Kia has arrested the slide in its sales and is set to regain lost ground.

Local Kia sales boss Bill Gillespie says the arrival of the new turbodiesel Sorento (more here) and two new variants of the Sportage compact SUV will set the scene for the importer to turn its fortunes around in the latter half of 2007. Further, the arrival of a new 'tougher' light commercial and the marque's Euro-designed Rondo 'pocket' peoplemover are also fillips he says.

"There's no big secret that both ourselves and Hyundai are down on a year-to-date basis compared to last year," Gillespie told the Carsales Network. "The [Korean currency unit] won's been under a bit of pressure and we've just got less money to throw around."

Highlighting the small car market Gillespie reiterated the 'heat' of the segment in which, according to the Federal Chamber of Automotive Industries VFACTS figures, no less than 24 models from 17 manufactures are currently duking it out.

"It's not just the RRP they're throwing around is it?" Gillespie said referring to the discounting on models like Nissan's Tiida. "Underneath that Corolla price there's a fair bit of fast pedalling going on. When you've got marketing money and bonus money that's so far above other brands it makes it tough for those other brands to compete," he opined.

According to Gillespie Kia has to "swim harder, get up earlier, think of everything you can possible think of, introduce new models and hope the currency swings around a little bit because the market isn't going to turn down".

Gillespie says that for 2007 Kia is on track to match its original 2006 target of 25,000 units. This represents around 25 per cent growth on the actual sales number achieved last year (20,770) and will near-match 2005's total of 25,293. At the end of July Kia had delivered 11,775 vehicles -- just over 1000 less than the same period last year.

"We've done some internal projections and at this stage were tracking for 23,300 sales. The [25,000 sale] target will be a considerable challenge but it is still achievable," Gillespie said.

In the coming weeks Kia will debut two new variants of the Sportage -- a CRDi-engined all-wheel drive and a 2.0-litre petrol engine front-wheel drive model. Gillespie will need both variants to hit the ground running to reach his total.

So too, the Rondo (nee Carens) -- the compact seven-seat peoplemover Kia will put on sale in November. The company is still finalising spec and pricing for the attractive two-box family 'truckster' but we expect it to arrive at around $25,000 with a good complement of equipment.

Kia's steady LCV performer, the K2700 tray, will be runout in the latter months of 2007 with its replacement the K2900 boasting a bigger, better and cleaner Euro IV compliant diesel powerplant and a 50 per cent increase in payload to 1500kg (with optional alloy tray). It too should do strong business for the carmaker.

But Gillespie admits Kia's current range must also perform if the turnaround is more than fleeting.

The 1.4-litre entry-level Rio introduced early this year as an entry-level light car now accounts for around 60 percent of that model's volume. With almost one in two Kias sold in Australia a Rio, therein lies the rub.

While Aussies appear more than happy to accept Kia as a provider of 'cheap and cheerful' transport, in the absence of an image-changing car like the European-built Cee'd, the brand still struggles for new buyer traction without a significant price and/or value advantage.

Kia's Cerato small car is a prime example of the uphill battle the marque faces Down Under.

Targeted at the 'affordable' end of the small car market, the five-door hatch and sedan have logged just shy of 1600 sales year to date.

This is 33 per cent down on the same period in 2006 -- and in a segment that's over seven per cent up year to date and where Mazda and Toyota have models that have posted over 18,000 and 27,000 sales YTD respectively.

According to Gillespie, though Cerato sold as many as 400 units a month shortly after its introduction, the car has "had a pricing issue for probably the last two years."

"We all saw what happened when Nissan launched the Tiida at $19,990 -- it struggled until they brought it back to $17,990, and more recently they had it at $17,990 with $1000 free fuel. Viva's at $16,990 and [Holden's] played with 'driveway' at that. Both those badges [Nissan and Holden] are bigger than Kia. And we have a car at $16,990. It's a big challenge."

Gillespie joked: "Someone called Cerato the 'Jan Brady' on the [new] car ranges. If you took her out a couple of times you'd like her and end up having a long relationship. Unfortunately the Cerato doesn't get taken out as much as it should."

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