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Sub-$20k push won’t hurt us: Kia

Strong start: Kia’s current Picanto has been a sales success for the brand in Australia since its launch in April last year.

Kia says plans to dominate sub-$20,000 passenger segment will not impact brand

Kia logo10 Mar 2017

By TIM NICHOLSON

KIA Motors Australia’s (KMAu) push to become one of the top players in the sub-$20,000 passenger car segment does not contradict the company’s desire to ditch its cheap and cheerful image, according to Chief operating officer Damien Meredith.

As previously reported by GoAuto, Kia offers three models from below $20,000 driveaway in Australia, including the $14,990 Picanto micro car, the $16,990 Rio light hatch and the $19,990 Cerato small car.

KMAu has previously signalled its intention to be one of the market leaders in these passenger segments, but Mr Meredith rejected the suggestion that the strategy would not help the company shake off its cheap and cheerful reputation.

“No not at all because if you study what we have done as an organisation over the last three years, you will see that the 50 per cent of volume is driveaway and 50 per cent is not,” he told Australian journalists at the Geneva motor show.

“Look at what we do with Sportage, Carnival, Optima and obviously Sorento (no driveaway pricing). So we are very careful to manage that. Last month SUVs outsold passenger cars for first time ever. But there is still a couple of hundred thousand cars in there (passenger). So if you are in a strong position, and you are getting more market share as the years go on, that gives you good foundation.”

Mr Meredith said that Kia’s volume in Australia was not predominantly made up of sub-$20,000 passenger cars, with the company’s other more expensive models helping to grow sales.

“It is very important to understand that our volume doesn’t just come out of Rio, Picanto and Cerato, we get a lot of volume out of Sportage – 1200 cars last month. Sorento and Carnival are creeping up to that 800 a month collectively. There is a bit of work to do with Optima and we know that.

“All in all, our strategy is pretty robust and it has worked pretty well for us so far over the last couple of years. Saying that, you can’t rest on your laurels, you have got to be respectful of your competition. The market can change very, very quickly and fortunes can change very, very quickly,” he said.

In 2016 sales, Kia’s Picanto ran second in the micro-car segment with 1934 units, trailing Mitsubishi’s Mirage (3064), while in the light segment, the Rio (6054) was seventh behind the Hyundai Accent, Mazda2 and Toyota Yaris.

The Cerato had its best sales year to date last year with 13,111 units, but it was behind the top selling Toyota Corolla (40,330), Mazda3 (36,107) and Hyundai i30 (37,772).

Overall, Kia had a record year in 2016, with 42,668 sales, representing a 26.5 per cent increase compared to 2015.

Mr Meredith quantified the split between retained customers and those that were new to the Kia brand.

“We run at about just over 60 per cent buyer loyalty so if Mrs Jones bought a Rio five years ago, she has probably bought another Rio. We are relatively high but that’s pretty good.

“Obviously our pie has grown a lot over the last few years. Not only because of people who are being loyal, it is because of new people coming to the brand.

“Picanto is important to get people into the brand at a price point then maybe their next car is Cerato, then next car is Sportage then maybe Sorento. That’s the way you have got to look at it. If you get a person in their driving cycle, they get four or five cars from the same brand – you’ve done your job.”

Mr Meredith said that while the seven-year warranty was a key driver behind the company’s recent growth, there were a number of other factors relating to customer care that have also had an impact.

“We have changed the dealer network significantly. We are a lot better now than what we were in regards to how we address customer concerns. We were always pretty good at it, but I think now we are very good.

“For example, if a complaint comes through Kevin’s (KMAu general manager media and corporate communications Kevin Hepworth) department, we are onto it straight away. If it comes through normal channels, we are onto it straight away.

“I get a listing of critical cases on a daily basis and the way we are structured, I can just talk to Kevin or (national service manager) Phil Murray and sit down and say what should we do, but an answer is given very quickly.

“That helps build respect within the customer base and our customer satisfaction is quite high.

“It’s a challenge for us. The other thing is you can’t work in a bubble. You have got to respect the competition. And you know that they are trying as hard as you so you just have to be better at what you do and how you deliver. That’s what KMAu does relatively well at this point in time.''

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