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Kia stands its ground on bold recovery plan

Diesel offering: The Sportage gains a turbo-diesel in July.

The Korean car maker plans to fight back from 2006 losses

Kia logo1 Feb 2007

KIA Motors Australia has bullish sales projections for 2007 and 2008, despite losing market share last year and falling out of the top ten on the sales chart.

The company has targeted a 50 per cent increase in sales over the next two years.

The first year as a factory-owned franchise in Australia was a difficult one for the Korean car-maker. Sales dropped in 2006 by 17.9 per cent – in an overall market that was the second-best on record.

Kia crashed from 25,293 sales in 2005 to only 20,770 last year.

However, Kia Australia director of sales and marketing Bill Gillespie predicts it will return to sales of more than 25,000 this year and has a bullish target of 30,000 for 2008.

Most of last year’s lost sales were caused by the discontinuation of the Pregio light commercial van, which accounted for most (3164) but not all of the drop.

Pregio was killed off because of worldwide production capacity problems and there is still no replacement on the horizon.

Kia Australia is desperate and even looked at turning the Carnival people-mover into a van, as well as the K2700 ute.

Despite the LCV set-back, Mr Gillespie believes there is enough new model activity in the works this year to recover lost ground.

"We need make up for the loss of the Pregio van," he said. "It’s not coming back in ’07 and we don’t have any information that it’s going to be coming back next year. But we have plans to replace that volume and we will be doing so.

"We want to make sure we get back to tenth (in sales) this year. VW (which passed Kia) went on a huge push last year. They obviously got improved pricing and they spent a lot of money to get to that point and it paid off for them.

"Being in the top ten is important to us. It doesn’t mean anything in reality, but it sounds a lot better than 11th.

"Last year we didn’t compete strongly enough in the small car area and we didn’t compete strongly enough in the medium SUV area."Mr Gillespie pointed out that Kia struggled with only a V6 petrol-engined Sportage in the medium SUV segment, but this will change with the introduction in July of a CRDi turbo-diesel variant.

Kia will additionally launch a cheaper front-wheel drive-only version of the Sportage mid-year.

The larger Sorento 4WD range will also benefit from getting a turbo-diesel version from May.

On the light-car front, Kia will next month introduce a new price-leader in the form of a 1.4-litre Rio that will be priced at $14,990.

 center imageFrom top: Sorento CRDi, Sportage CRDi and Kia Cee'd designers in action.

The previous 1.6-litre entry-level Rio will increase by $500 to $16,490 with the addition of ABS as standard.

Two new Rio variants added late last year – the 1.6-litre EX-L sedan and the Sports hatch models – will continue, still priced at $18,990.

Kia Australia has little chance of getting the acclaimed European-built Cee’d within the next couple of years (see separate story), leaving the under-performing Cerato as Kia’s competitor in the popular small car segment.

To help cover for the lack of Cee’d, Mr Gillespie is talking tough to the parent company for price assistance on the Cerato before a facelifted model is released in the coming weeks.

The revised Cerato will have a host of minor cosmetic changes as well as MP3 compatibility, standard ABS, active headrests, and side and curtain airbags.

Mr Gillespie is also discussing pricing with Korea to get the baby five-door Picanto here at an entry level that would undercut the $11,990 Holden Barina.

Kia has been trying to get a diesel-engined version of the medium-size Magentis here for some time and hopes to be successful this year.

The Rondo compact people-mover – recently launched as the Carens in the US and Europe – will almost certainly arrive here in time for the Sydney show in October.

It will be powered by both four-cylinder petrol and diesel engines, with five- or seven-seat capacity.

Rondo is expected to be priced from $23,995.

Overall, Mr Gillespie believes that Kia must rise above its cheap and cheerful position in the market and become a force in segments other than light and small, which are being targeted by bigger brands like Holden, Ford and Toyota.

Faced with currency pressures because of the strength of the Won, Kia Australia is looking for price assistance from Korea to stay competitive in its traditionally strong segments.

At the same time, it is going upmarket, as evidenced by a forthcoming Platinum edition Carnival model that will sell for more than $50,000.

What's coming from Kia:
Cerato facelift February
Rio 1.4 March
Carnival Platinum March
Cerato safety pack March/April
Sorento CRDi May
Sportage CRDi July
Sportage 2WD July
Rondo compact people-mover October
K2700 facelift October
Picanto Second half 2007
Magentis CRDi Second half 2007

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