Under the sportlight

AUSTRALIAN light-car consumers suffered a massive blow with the withdrawal last week of Daihatsu, however rival manufacturers are insistent the segment is far from dead.

Key rivals including Hyundai, Kia, Suzuki and Proton believe the combined loss of 10,000 vehicles to the local market stemming from the loss of Daihatsu and GM Daewoo, the latter having pulled out last December, should translate into a small but vital gain for their own budget offerings.

Hyundai Motor Company Australia spokesman Richard Power said there were new opportunities now for importers like Hyundai "but it’s a little measured because they (Daihatsu) obviously weren’t a big-volume player".

"But it does leave a little room in a very crowded segment," he said, pointing to the 20-plus models on offer. "It’s very heavily subscribed but the freeing up of a few slots does allow a little room to move with product." Mr Power said a more pressing issue was the competition the Korean brand faced from bigger players such as Daihatsu parent Toyota, and Holden and Ford.

"They have the budget and might to market extremely aggressively, quite often targeting us directly," he said.

This marketing clout was often particularly directed at the light-car segment, which needed heavy investment to survive and prosper, he said.

Broken down into specifics, Daihatsu last year sold 5016 vehicles, with Daewoo managing 5514 vehicles. The diminutive Kalos secured a big slice of overall Daewoo sales with 2695 vehicles sold.

Taking out the larger models offered by Daewoo, this leaves a hole in the light-car arena of up to 8000 vehicles.

Kia Automotive Australia spokesman Edward Rowe stressed it was not impossible to be profitable on less than 5000 units a year in the local market, but that it required diligent management of expenditure.

He also argued the loss of two importers did not signal the Australian market was too costly for budget brands to compete in.

"You’ve got the traditional squeeze of competitors from the bottom but you’ve also got a squeeze from the top, which is a number of European cars coming down into that sector," he said.

Mr Rowe said cheap finance also meant more people could borrow to purchase cars that were once out of their price range.

He said it was now quite easy to find the extra cash to purchase a car further up the food chain, like the VW Polo, Citroen C3 or Peugeot 206. The new Ford Fiesta and Holden Barina also added to the squeeze.

"If you want to compete successfully in that sector you’ve got two alternatives," Mr Rowe said. "One is that you must have a decisive value-for-money offer in price and equipment. Or you’ve got to have the cache of a European badge.

"If you have neither of those it’s tough going." He further insisted that Kia did not intend to introduce to Australia the Picanto hatch, which would slot in under the $14,990 Rio.

Over at Suzuki Australia, the sole remaining Japanese micro-car brand Down Under, general manager David Le Mottee said he was surprised by Toyota’s decision to withdraw Daihatsu.

"To be honest, I don’t know how to take the Daihatsu news because there was a time when we were very fierce competitors and we used to go toe-to-toe with volume all the way. But they’ve dropped back in volume over the past few years," he said.

"What does surprise me is that they’ve just launched a brand-new car (Sirion) with some bold statements about it and a month later it’s all over." In contrast, Suzuki is on an upswing with its new Swift model pushing total Suzuki sales to 1053 vehicles so far this year, according to VFACTS figures issued yesterday. The Swift itself managed to find 494 buyers last month and some dealers are holding three-month waiting lists.

Another car importer struggling in the local small-car market is Proton. It has had a dismal start to 2005, selling 381 vehicles in the first three months. Last year it sold a total of 1378 cars and could not register even one percentage point in market share, managing just 0.9 per cent.

By comparison, Daihatsu achieved a passenger vehicle share of 0.6 per cent and GM Daewoo 0.9 per cent.

Proton’s Gen2, launched late last year, has also failed to ignite with just 170 sold thus far in 2005.

Proton Cars Australia managing director John Startari admitted to GoAuto last year that low-priced market entrants were a threat to the Malaysian importer.

Furthermore, he said the amalgamation of smaller marques giving more spend power "and the ability of other manufacturers to introduce competitive blocks to new Proton models" were also cause for concern.

"The vehicles that we’re bringing in, in the short-term, are all in price-sensitive markets – and the biggest threat is to sell on price," he said.

"We’ll be price-competitive – we’ve certainly learnt a lot of lessons (on that score) – however we cannot sell on price alone. If we badge our price as the selling point, I think we may as well close up the doors tomorrow.

"We’re not going to be another Kia where we achieve 30,000 units in five years – we want to remain a niche player, sell moderate volumes in the 5000 to 10,000 units (range) and have a strong dealer network. And I think that’s the key." The latest VFACTS figures show the light-car segment is still reasonably strong, representing a 14.8 per cent share of total sales this year, compared to 14.4 per cent for the same period in 2004.

But take out the some of the big nameplates like Getz, Echo and Barina, and there are a lot of cars fighting over the leftovers.