Kia bucks downward sales trends with passenger cars

KIA Motors Australia (KMAu) has gone against the grain to achieve sales growth in 2019, pushing through the new-vehicle market’s downturn and using passenger cars as the backbone of its strong year-to-date performance.

To the end of September this year, the new-vehicle market is down 7.9 per cent, however Kia is one of only two top-10 brands to achieve sales growth this year, with a 2.2 per cent year-to-date increase, from 45,374 units to 46,360.

The other brand is Mitsubishi, which has just managed to increase its overall tally, by 0.1 per cent.

In January, the South Korean brand stated that it was aiming to achieve 60,000 sales for the first time after managing 58,815 sales in 2018, and last month the company confirmed it expects to finish the year with 61,500 new registrations, increasing its market share from 5.1 to 5.7 per cent.

Some brands are in the process of abandoning passenger cars in favour of SUVs and light-commercial vehicles, reflecting sales trends that have seen passenger cars fall 16.1 per cent this year, compared to dips of 3.3 and 4.3 per cent for SUVs and LCVs respectively.

However, the key to Kia’s 2019 success lies in passenger cars, with the Australian operation able to take a bigger share of various market segments – particularly micro, light and small – as competitors begin to withdraw from the shrinking categories.

Speaking to GoAuto at the recent launch of the all-new Seltos small SUV, KMAu chief operating officer Damien Meredith said the company has a dedicated strategy for the Picanto supermini, Rio light hatch and Cerato small car, using the reduced popularity of passenger cars to its advantage.

“A lot of it is product-driven, and we’ve been very fortunate to have great product coming through over that time. Specifically we do have a passenger car strategy in regards to Picanto, Rio and Cerato,” he said.

“Whilst passenger sales are decreasing, we’re increasing and we believe that we can continue to increase sales for probably a couple of more years before the market is not allowing for us to get growth.

“So we were always confident that those three vehicles would increase market share in those passenger segments, and it’s worked out that way so that’s worked pretty well.”

Through the first three quarters of 2019, Picanto has increased its sales from 4180 units to 4466 – an increase of 6.8 per cent – giving it an 81.2 per cent share of the micro car segment, which overall is down 12.2 per cent with the removal of the Holden Spark and runout of the Mitsubishi Mirage.

Sales of the Rio have dipped 3.5 per cent to 4928 units, however its share of the class has gone up from 9.1 to 10.2 per cent with the segment-leading Hyundai Accent and Holden Barina being discontinued.

Arguably the most impressive performance of 2019 for Kia has come from its best-selling model, the Cerato small hatch and sedan, which has seen a 14.1 per cent boost in sales from 14,725 units to 16,084 YTD, despite the segment experiencing a significant overall dip of 17.9 per cent.

The Cerato, which launched in hatch form in January, is the fourth best-selling model in the segment behind the Toyota Corolla (23,345), Hyundai i30 (21,888) and Mazda3 (20,804), and has increased its share by 3.9 per cent to 14.1 per cent.

Overall, Kia currently ranks third in Australia for passenger car sales, while its SUV sales put it in eighth place. It plans to finish the year as the sixth best-selling brand overall – even without light-commercial vehicles in its stable – with its target of 61,500 units.

Mr Meredith added that its consistent pricing structures have also contributed to Kia’s passenger car success.

“I think in regards to our communication and pricing we’ve been consistent, so the overall strategy has been that consistency of product, consistency of pricing,” he said.

When asked what the brand will do once passenger cars stop becoming a profitable venture for the brand around 2021 or 2022, Mr Meredith said KMAu has plans up its sleeves to replace the volume elsewhere.

“We do (have a strategy going forward), and we hope that we’ve got other models in other segments by then to keep kicking the volume along,” he said.

The most likely starter will be a pick-up to mark Kia’s return to LCVs, which as GoAuto has reported will surface around 2022.

KMAu is hoping to release a full range of utes, light trucks and possibly even a van to Australia, which would add valuable volume for the brand as passenger cars continue to dwindle.

Another area in which Kia could seek extra volume is with a sub-Seltos compact crossover, considering the Seltos sits at the higher end of its segment.

Hyundai recently launched the diminutive Venue small SUV which sits under the Kona in its line-up, and a Kia-branded version could help pick up the slack once sales of the Picanto and Rio in particular begin to decline.

One model still off the cards for Australia is the Telluride SUV, which is still slated for left-hand-drive production only, despite the mechanically related Hyundai Palisade firming for a launch in Australia.

KMAu is also predicting growth in 2020, albeit a small increase against a market it expects to drop around 20,000 units, from roughly 1,070,000 units to 1,050,000.

The brand is anticipating it will improve on its predicted 2019 figure by around 1500 units to 63,000, with the Seltos to help offset contracting sales of the Sorento large SUV which is going into runout, among other model declines.