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Kia Ready to Take Advantage of Growing Car Demand

Published: September 18, 2013 (Issue # 1778)



  • With the Russian market showing potential for growth, Kim says Kia is ready to meet demand with an affordable product lineup.
    Photo: Igor Tabakov / SPT

Kia Motors could invest inmaking more cars inRussia, where it is thethird best selling brand, if themarket rebounds andshoots past the3-million mark, theSouth Korean companys local chief said.

If overall sales ofnew vehicles climb to3.5 million units, it will be agood enough number toconsider committing money toa new assembly line, said Kim Seong Hwan, thecarmakers president inRussia.

All our studies are ready, he said ina rare interview.

Kim did not say when themarket might expand that much. Russia may surpass that level in2018 atbest, according toOleg Datskiv, chief executive ofmarket research portal Auto-Dealer.ru.

Fornow, sales are ona slippery slope. Customers are likely tobuy 2.8 million new vehicles this year, which would be afive-percent decline fromlast year, theAssociation ofEuropean Businesses predicted inJune.

Kia cars now roll off assembly lines attwo locations inRussia. One is aSt. Petersburg plant co-owned with sister company Hyundai Motors, which allotted Kia thecapacity tomanufacture 100,000 vehicles now theRio model, thethird bestselling car brand inRussia.

Kia can also order thesame amount ofcars froma Kaliningrad plant that belongs toAvtotor andnow cranks out nine models forthe brand.

TheKorean car giant aims tosell 200,000 cars locally this year, including imports, meaning it will not utilize its full Russian production capacity.

If Kias main office decides toadd local assembly lines, it may choose places other than St. Petersburg, Kim said.

Ina declining market, Kia is one ofa few brands that are going against thetide. It sold four percent more cars inthe first seven months ofthis year than inthe same period last year, according todata bythe Association ofEuropean Businesses inRussia.

Kim attributed therobust performance toautomobile designs byPeter Schreyer, aGerman designer known forhis work atAudi, who joined theKorean company in2006. Inaddition, Russians appreciate theyoung anddynamic spirit ofthe brand, Kim said.

With a seven percent market share, Kia trails behind thelocal auto industry champion AvtoVAZ andFrances Renault.

Inorder tocapitalize onRussias growing appetite forexpensive sedans, Kia brought its Quoris model tothe market in March thefirst time thecompany introduced aluxury car here, Kim said.

It is also taking proper note ofthe growing popularity ofsport utility vehicles ina country where anincreasing number ofpeople can afford them fordriving through snow andotherwise rough terrain. Kim estimated that theproportion ofSUV sales would bump to38 percent inabout three years fromits current 33 percent.

Kim agreed with acommonly held view that Russia could overtake Germany as thelargest European market forcars atsome point before theend ofthis decade. Russias relatively low number ofcar owners approximately half ofthe 500 vehicles per 1,000 people inEurope holds promise forgrowth. Also, more than half ofcars inthe country are older than 10 years, meaning theres a likelihood that owners will discard them fornew ones.

As alarger number ofcustomers are about tostart shopping forautomobiles, Kia is preparing tocounter therenewal ofthe affordable product lineup byAvtoVAZ andthe success ofRenault inthe low-cost segment with theLogan model, Kim said.

We are watching them closely, he said. We have plans athand torespond strongly tothe offers ofour competitors.





 


ALL ABOUT TOWN

Sunday, Nov. 23


Get in the holiday spirit at todays Winter Bazzar at the Astoria Hotel. Featuring gifts from around the world such as French eclairs, Dutch cheeses and Indian jewelry, the annual event organized by the International Womens Club will feature 18 international stands and raise money for charity through the sales of a diversity of products that further illustrate the citys international connections.



Monday, Nov. 24


Dr. Axel Schulte, Department Head at Fraunhofer Institute for Material Flow and Logistics in Dortmund, Germany, is the featured speaker at the SPIBA Industrial Committee lecture on The Fourth Industrial Revolution: Digitalization of the Supply Chain. The event begins at 4 p.m. at the Graduate School of Management at 3 Volkohvsky Pereulok and registration is required by Nov. 21 either by emailing office@spiba.ru or calling 325 9091.



Tuesday, Nov. 25


Tag along with AmCham during their Industrial St. Petersburg Tour program today. This incarnation of the ongoing series will visit Philip Morris Izhora and include an Environmental Health and Safety Committee meeting.


Find out how to expand your business east during the Business With China forum beginning today and concluding tomorrow at the Lenexpo convention center. The largest Russian forum dedicated to business with the Asian giant, topics that will be discussed include logistics, customs clearance, trade financing and many more.



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