Market Insight: Component supply doesn’t halt Kia

VARIOUS world events have obliterated the sales of a number of longstanding car brands but, remarkably, there have been stepping stones for success for some manufacturers.

Kia is not alone in battling the  COVID-19 pandemic’s lingering effect,, from labour issues and quarantines affecting production, to sourcing components, shipping vehicles and problems at the retail side with lockdowns.

Yet in a difficult sales environment, it has become a star performer.

Sales are up seven per cent year to date, in a passenger car and SUV market that is down 5.5 per cent. For the month of June, Kia was up 29 per cent in a market that rose only 1.8 per cent.

It is now the nation’s fourth best-seller, tucked between Mitsubishi and Hyundai; a far cry from 20 years ago when Kia was the 12th best-seller and a brand name few had really come to grips with.

Kia admits that during the pandemic, it has been assisted in overall sales by some things that have simply gone wrong for other brands and other markets. One such factor was bank accounts in Russia being frozen, which led to the diversion of vehicles from that market into other markets with Australia often being the unlikely beneficiary.

Kia Australia product planning general manager Roland Rivero said overseas movements aside, what boosted sales was the brand’s excellent dealer network in Australia.

“They’ve done a very good job,” he said.

“As an example, where there have been shortfalls in Sorento stock, dealers have been able to suggest to customers to look into either a higher-spec Sportage or, for more space, to a Carnival.

“The new-generation Sportage with a longer wheelbase and overall length is far bigger than the outgoing model and it has done a really good job in sales and lifted the model to record months.”

However, there are still models with weak sales triggered by supply problems.

Mr Rivero said the Cerato small car is down (by 31.4 per cent YTD) as its factory prioritises Niro and Sorento models for other markets.

“So there's just a shortage in supply of Cerato,” he said.

“But we have been lucky because where we have shortfalls in Cerato we've been able to make up for with the (light SUV) Stonic.

“We can definitely sell a lot more Ceratos than we have available. If we had supply we could sell 2000 Ceratos a month but we're just not getting anywhere near that at the moment (Kia sold 946 Ceratos in July). And that's been tough.”

Kia Australia previously had difficulty getting Stinger stock as buyer demand swamped supply. But in a twist, the semiconductor shortage meant more stock for Australia.

“The shortage affected the idle stop-and-go system that is fitted for the US market,” Mr Rivero said.

“Because Australia doesn’t have that system, it meant more units were available for other markets including us.”

July sales of Stinger were up 93.1 per cent as more stock arrived from the Korean factory. But it may be short-lived.

Mr Rivero said the idle stop-and-go semiconductors were back in stock at the factory and the US market will once again get the lion’s share of production.

Kia is also doing well with the new Niro hybrid and EV in Australia, with sales up 201 per cent year-to-date.

“The appetite is definitely growing in our market for the ‘green’ models,” Mr Rivero said.

“And it's growing at a pace that Kia is very pleased with. We’re not getting huge amounts of stock for Niro as most go to Europe. It’s very popular there and the previous generation Niro was second behind only Tesla in the UK market for EVs, for example, as well as being huge in Scandinavia where Kia is the number two brand behind Volvo.”