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Vroom! Kia plans product blitzkrieg in India

Ammar Master | Updated on January 11, 2018 Published on July 20, 2017

Korean carmaker is set to launch four models in rapid succession starting 2019

Kia Motors is hedging its bets on India with an aggressive product plan. Our market intelligence at LMC Automotive suggests that the Korean automaker plans to introduce at least four vehicles in rapid succession when its new plant in Anantapur in Andhra Pradesh kicks off operations in the second half of 2019.

The first Kia model to hit the market is likely to be a subcompact SUV. We assume this vehicle to be the Kia KX3, albeit a slightly modified version for India to meet lower cost parameters. At the same time, it is equally likely that Kia may choose to market a sibling version of the recently launched Hyundai Kona. Engine options are likely to be 1.4 and 1.6 litre gasoline (petrol) units, along with a 1.5 litre diesel motor.

An all-new subcompact sedan presumed to be a sedan version of the Morning is expected to arrive by the first half of 2020. The new car is being developed for India in a strategy similar to that devised by Hyundai when it designed the Grand i10-based Xcent. The Kia Morning Sedan is expected to be equipped with a 1.0L gasoline engine, as well as the 1.4L gasoline and 1.5L diesel units.

Kia is then tipped to bring the K2 (or Pride/Rio) subcompact hatch by around mid-2020. This again is likely to be slightly modified for India and will compete in the same segment as Hyundai’s Elite i20. Power for the K2 is anticipated to come from the 1.0L and 1.2L gasoline engines and a 1.5L diesel motor.

The fourth Kia model is, in all likelihood, the Morning (or Picanto), due for launch towards the end of 2020. The model is expected to sport 1.0L and 1.2L gasoline engines, plus a 1.5L diesel unit.

Clearly, Kia’s first order of business is to make a play in the fastest-growing segments in the market. Therefore, it plans to start its India innings in the increasingly popular subcompact SUV segment. Competition will certainly be tough but the novelty of the Kia brand should attract buyers looking to move away from the traditional players in the market.

Since success in India cannot be guaranteed without a foothold in the bread-and-butter subcompact car segment, Kia has rightly realised the need for a subcompact sedan and hatchback to effectively compete against market leaders, Maruti Suzuki and Hyundai. In fact, Kia’s highest volumes should come from this category.

Completing its initial strategy, the Morning is aimed at the comparatively lower end of the market even though Kia is likely to position its small car slightly above the models from Maruti Suzuki and Tata Motors.

To be sure, the delayed entry of the Morning must be partly influenced by the upcoming stringent safety and emissions regulations that will become effective in India over the next couple of years.

No time to waste

Introducing its entry-level model after these norms are in place will provide defined cost parameters, which in turn, will translate into an informed business decision and also help properly price its vehicle. Kia should also have a better understanding of the potential of India’s minicar market by then.

It is definitely encouraging to learn that Kia is being aggressive with its product strategy in India — and is not waiting for one product to become a success before introducing another. The automaker is already late to the market, and it has precious little time to waste in its efforts to win buyers.

A strong product offensive will naturally require an equally aggressive marketing strategy, with the imperative to invest in the rapid build and expansion of a retail network if Kia is to match the customer reach of its rivals.

In our opinion, it would be a mistake for Kia to piggyback on Hyundai’s retail network even as a stopgap measure. We believe it would be far more effective – though costlier and time-consuming – for Kia to establish its own retail format from the start to help establish a distinct brand identity in an already crowded market.

Given Kia’s already high investments committed towards new factories in Mexico and China, we previously did not think the automaker would come to India as early as it has now announced. Of course, the automotive landscape is constantly changing. For one, lower growth prospects in China have urged automakers to look elsewhere to compensate.

Sliding Chinese market

For Kia, China was one of its bright global spots until the end of last year. However, its volume began sliding soon after South Korea decided to deploy a US missile defense system (THAAD). By the end of May this year, its passenger vehicle sales shrunk by more than half (-54 per cent) versus a year ago as a result of the anti-South Korean sentiments.

Kia’s momentum is also fading because its brand presence is not solid enough to compete against the country’s joint brands in the top-tier cities, while its vehicles are not as competitively priced to succeed in the lower-tier cities. In short, its future prospects in China are from bright given the increasingly fierce competitive environment in the market.

In this backdrop, India could play a pivotal role in the long term to compensate for sales lost in China. Even so, while the country has long been known to have high potential, an automobile operation there has at times been described as being in a marathon — requiring rigorous training and tremendous patience. Kia will thus have to stay the course to attain long-term success in India.

The writer is Senior Manager, LMC Automotive

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Published on July 20, 2017
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