KIA Insider

Kia pushes expansion strategy for India

Kia Motors is set to unveil its new concept compact SUV at the upcoming Auto Expo 2020 in India as part of an expansion strategy for what it sees as a high potential market.

The company has been launching a vehicle on India's market every six months or so. Last year, the company successfully launched Seltos, which competes with the likes of Hyundai Creta, MG Hector, Tata Harrier and Mahindra XUV500, in the above 4-meter compact-SUV segment.

"2020 launches also include a premium multi-purpose vehicle (MPV) – Kia Carnival," says Animesh Kumar, Director of Automotive Consulting at GlobalData. "Carnival's booking started in January and it will be launched in the India Auto Expo 2020. The vehicle is already generating a lot of curiosity and excitement. It sports premium look and offers high-end specs at a reasonable price."

Kumar also notes that localisation is also a key strategy for the brand. "It will help Kia to keep costs down and able to offer a competitive price for Carnival and future models," he says.

Kia has a plant in Anantapur in Andhra Pradesh with an installed capacity of 300,000 units per annum on a three shift basis (although it is currently on two shifts).

However, Kia aims to hit the installed capacity by 2022, boosted by planned new models. It is also planning to use the plant for increased exports. Similar to Seltos, Carnival and future models are expected to be exported to global markets from India.

"However, Carnival is unlikely to generate the volumes that the closest comparable rival in MPV segment – Toyota Innova Crysta – generates," Kumar says. "Innova Crysta is in a lower price segment as its price ranges from around INR1.53m to INR2.4m (ex-showroom). Innova has been one of the most preferred MPVs in India and attracts private buyers as well as buyers in commercial fleet segment, including the taxi segment. Carnival will be positioned as a premium product and will have higher pricing. In the taxi segment, it is neither likely to generate significant demand nor likely to be offered at all. Kia's objective from Carnival will be to position itself in the premium segment instead of to generate high volumes."

Kumar highlights the upcoming addition of a smaller SUV as a key move in the Indian market. "From sales volume perspective, adding a smaller SUV in the portfolio is a great move by Kia. The new sub-4 meter compact SUV that Kia will launch in H2 2020, is expected to have high uptake. The name of the model has not been announced but it is rumoured to be called Kia Sonet. The model will compete with Tata Nexon, Mahindra XUV300, Maruti Suzuki Brezza, Hyundai Venue and Ford EcoSport. Kia will be showcasing the model in India Auto Expo 2020 before launching it later in the year. Kia is expected to launch two more models in 2022, taking the total portfolio to 5 models."

The brand is also investing in its service network. "Another parameter on which Kia has its strategy right is the sales and more importantly the service network. Indian customers give high weight-age to the service network. They understand that they will have one or few interactions with the sales dealership but will need several interactions with the service centers during the life span of the vehicle. Kia has learnt well from its sibling- Hyundai – and while it is expanding its sales touchpoints to grow its footprint in India, it is also increasing the service network."

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