Market Insight: Kia sticks to bold sales targets

THE arrival of Kia’s Cerato hatchback this month is significant for the South Korean brand as it looks to reassert itself on the Australian new-vehicle sales charts and take an entrenched position among the top 10 brands.

The company is aiming for a five per cent share of the market by 2015, which would put it ahead of where Subaru and Honda are at the moment – and even past Volkswagen – although each of these brands are working on improving their current position.

Volkswagen sold almost 55,000 vehicles last year for a 4.9 per cent share and seventh position in Australia’s Top 10, not far behind Mitsubishi on 5.3 per cent with just under 59,000 new registrations.

Kia, on the other hand, managed 30,758 sales in 2012 – up an impressive 22.4 per cent on 2011 – for a 2.8 per cent share (up from 2.5 the previous year), although a resurgent Honda (35,812 sales, 3.2 per cent share) kept the door closed on a coveted top-10 position.

To crack 30,000 meant Kia Motors Australia (KMAu) reached its stated sales goal, but with sales and share falling this year the company now faces an uphill battle to achieve its ambition of a five per cent slice of arguably the most competitive market in the world.

To the end of July, Kia had sold 17,680 vehicles to be down 2.6 per cent year-to-date, for a 2.7 per cent share (down from 2.9 at the same point in 2012).

In comparison, Subaru sales have fallen by a similar margin (2.3 per cent) and Volkswagen is treading water (up 1.4 per cent YTD), while Honda sales have continued to surge ahead – up 38 per cent YTD – and Mitsubishi has likewise improved its position over last year by no less than 24 per cent.

Kia is confident that sales will improve with the arrival of the Cerato hatch, which is expected to be a more popular variant than the sedan launched four months ago, attracting up to 70 per cent of total sales across the model line.

The company must contend with the crowded and cut-throat small-car sector – by far the biggest market segment in Australia – but has positioned the hatchback with a high specification and competitive pricing (from $19,990 driveaway) and will draw on the brand’s higher profile and stronger reputation that has bolstered it in recent years.

Year-to-date, Cerato sales are down 28 per cent (3382 units), with the Rio light car its biggest-selling model for now on 5751 units YTD (up 24 per cent) and the Sportage compact SUV also pitching in with 3372 sales (up 24 per cent).

The larger Sorento SUV (1820 YTD) and Optima mid-size sedan (1197) are both running lineball with last year – an upgraded version of the latter is due late this year or early next – while the ageing Carnival people-mover is down 22.5 per cent on 1626 units, soldiering on with a little over 12 months still to run before a new generation arrives.

Also coming soon is the redesigned two-door Cerato Koup – here in mid-to-late October, complete with a turbocharged variant that will be Kia’s first high-performance car in Australia – while another image-enhancing model in the form of the Pro_cee’d GT hot hatch arrives at the end of the first quarter of 2014.

A new Soul is also due in the first quarter, further boosting Kia’s small-car stocks.

Supply issues have clipped Kia’s growth in Australia, and overseas demand for key model lines continues to limit its potential, as does its lack of representation in key market segments such as LCVs (nothing on the horizon) and light-sized SUVs (still a couple of years away).

The increasingly competitive new-car market, which has prompted incredible deals recently from the big-name brands and earlier this month forced Opel out of business, also acts as a wheel clamp for most brands – but particularly those outside Australia’s top 10.

Kia has come a long way since entering the Australian market in 1997 and the low-point it reached just a year later with only 5047 cars sold over 12 months.

The 2015 target of five per cent share (circa 55,000 sales) looks over-ambitious, but the brand would not have reached 30,000 last year without plenty of ambition. Longer-term, the goal is to draw alongside sister brand Hyundai, which last year commanded an 8.2 per cent share with 91,500 sales.

And it was not so long ago, just a couple of years prior to the GFC, that Hyundai was trading below 50,000 a year.