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SUV sales to overtake passenger cars this year: Kia

Sorento moon: With Kia’s Sorento in high-demand globally, supply shortages could constrain the South Korean car-maker’s overall yearly growth.

Kia SUV demand outstrips supply ahead of forecast record year

22 Apr 2016

THE boss of Kia Motors Australia (KMAu) is confident sales of SUVs will overtake passenger vehicles this year for the first time ever, while supply issues for Sportage and Sorento will also affect the brand’s total volume.

Speaking with GoAuto at the national launch of the Picanto micro hatchback in Canberra this week, KMAu chief operating officer (COO) Damien Meredith said he expected the 10,000-unit lead passenger cars maintain over SUVs in the first quarter of 2016 to disappear.

“The market is up nearly 3.0 per cent and the market will be 1.19 (million units) for the year,” he predicted.

“We’re pretty positive that SUV sales will overtake passenger vehicle sales in total for 2016.” The 1.19 million total market forecast is above the 1.155 million volume in 2015, itself higher than the 1.113 million figure in 2014.

SUV sales are up 13.8 per cent this year, while passenger vehicles are down 8.0 per cent, with volume of 108,369 and 118,424 respectively to March 2016. In 2015, however, total SUV sales were 107,212 units behind passenger vehicles overall with volume of 408,471 and 515,683 respectively.

“The market is still very robust, it’s still very strong, we’re confident it will continue to grow,” Mr Meredith added.

The COO maintained KMAu will sell 39,000 vehicles in 2016 for an increase of 15.6 per cent year-on-year, however he admitted that greater supply, particularly for Sportage and Sorento, could increase that figure by up to 2000 units.

“For the first quarter we’re at 9549 sales and that is up 21.0 per cent (but) you’re probably asking why am I only saying 15.6 per cent growth for the year when we’re up 21.0 per cent for the first quarter? “Simplistically, our quota of vehicles we can get from Korea is built around that 39,000 (units) … it is supply dictated.

“Sportage globally, we’re limited by diesel engines. Sorento to a degree is a little bit difficult to get now and then. (Customers) have been waiting for Carnival, Sorento and top-end Sportage normally by about a month.

“I think (with better) supply, we might be able to do 2000 more, between 39,000 and 41,000 cars.” Mr Meredith said he is pleased with Kia’s growth especially compared with its South Korean rival Hyundai. However, he added that there are still greater opportunities with the Rondo compact MPV and Cerato small car in particular.

“20 per cent growth and 16 per cent growth (compared with 2014 and 2013 respectively) is not too bad, I don’t think at that level it’s sustainable (but) if the market’s up 3.0 per cent and you’re up 6.0 per cent I think you’re doing a pretty good job with regards to your volume and your market share,” he said.

“There is no airy fairy plan in regards to ridiculous volumes in regard to our mid-term plan. We said that we’d be at 50,000 cars (annually) by 2019/2020 and at the rate we’re going we may be a bit ahead of that plan.

“We just want to be consistent, we just want to grow in an orderly, sustained manner and make sure our relationship with our customer and dealer network is strong.” Of the difference in sales between Kia and Hyundai in Australia, Mr Meredith said: “That gap is closing, so when we looked at the figures in 2014 we were 28 per cent of Hyundai output and now we’re 34 per cent of Hyundai output, so that has grown.” “They’re around about that 100,000 (annual sales) mark and we’ll probably do 39,000 by the end of the year, so that’s growing,” he added.

Mr Meredith has said the brand should be capable of 15,000 annual units in the small car segment longer term, and has pondered a two-pronged attack in the popular segment with the current Cerato complemented by the European-built Cee’ d (see separate story). Last year 10,157 Cerato models were sold.

The COO further added he is hopeful of a future light commercial range (see separate story) and also sees growth opportunities with the Rondo compact MPV, which averaged just 17 sales per month last year.

“It (Rondo) has got a place, we’ve just got to give it a little bit more communication … I’d probably like to sell 50 per month, we’re nowhere near that at the moment but if we could do 50 per month I’d be really happy”.

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