The biggest challenge facing Kia Motors South Africa (KMSA) is the perception gap that exists in the local market, says CEO designate Gary Scott.
The 42-year-old Scott, who joined KMSA in 2002, took over from Ray Levin on July 1. Scott was previously KMSA’s sales director.
“Those who have driven our cars have shifted their perception, but the problem is the 90% of people out there who do not consider our cars when they want to buy a new vehicle,” says Scott.
“We have to debunk the myth that Kia is not a serious player in the market; that it is a cheaper Hyundai.”
Scott says the Korean imported brand started off as “cheap and cheerful” in the local market, but edged up when fresh new styling cues were introduced.
“Now we are busy with an engineering revolution. This is confirmed by our quality awards, including coming first in the authoritative J.D. Power initial quality study in 2016, pipping Porsche into second place. We will most certainly never want to be the discount option again.”‘
Cheap’ has not been the word to describe Korean vehicle imports over the last few years, ever since the rand started its sharp decline against the world’s major currencies.
Scott admits that the rand has hurt Kia in South Africa.
“Also, there is no such thing as a free lunch. You cannot improve a product without the price going up. Today, however, our pricing is on a par with our competitors, after four to five years of our vehicles selling at a premium.”
KMSA has been aided by the rand stabilising at around R13 to the dollar, as well as assistance provided by Kia’s head office in Seoul.
“We are now in a position where we can flex our muscles,” says Scott.
KMSA sold around 18 000 vehicles in South Africa in 2016, following a peak of roughly 25 000 vehicles in 2012.
Scott does not want to put a volume target down for KMSA in the current highly competitive, but struggling, local market.
“I would like to see our market share grow from the current 3.3% to 5%.”
Key here would be the introduction of new products, a focus on the service provided for customers through Kia’s 76 dealers and creating affordable finance offers in a tough economic environment.
New products will include a B-segment sports utility vehicle, currently under development at Kia, in South Korea. The Kia Stonic is set for release in Korea later this year, and will be based on the popular Rio hatchback.
“There are also opportunities for A-segment crossovers, based on the Picanto, although that won’t be available any time soon,” says Scott.
KMSA is also studying the launch of its first hybrid in the South African market, the Niro crossover.
The new Picanto small car will make its debut in South Africa later this year, as will the Stinger sports sedan.
“Then, of course,” says Scott, “when Kia launches its first one-ton lifestyle pick-up, we will most certainly be interested to also launch the vehicle in South Africa.”
The New Rio
The fourth-generation Rio hatchback faces some stiff competition in the crowded South African B-segment, says KMSA marketing director David Sieff.
A large number of people are buying down into the cluttered, price-sensitive B-segment, with these cars becoming a lot more refined and sophisticated, he notes.
The first two generations of the Rio sold just shy of 6 000 units in South Africa over 12 years, then jumping to 37 327 units with the popular, redesigned third generation.
Pricing for the new Rio starts at R219 995, which is the same price as the previous model Rio.
Scott is targeting retail sales of around 400 units a month.