Kia Ready to Take Advantage of Growing Car Demand
Published: September 18, 2013 (Issue # 1778)
Kia Motors could invest inámaking more cars ináRussia, where it is theáthird best selling brand, if theámarket rebounds andáshoots past theá3-million mark, theáSouth Korean companyĺs local chief said.
If overall sales ofánew vehicles climb toá3.5 million units, it will be aáôgood enoughö number toáconsider committing money toáa new assembly line, said Kim Seong Hwan, theácarmakerĺs president ináRussia.
ôAll our studies are ready,ö he said ináa rare interview.
Kim did not say when theámarket might expand that much. Russia may surpass that level iná2018 atábest, according toáOleg Datskiv, chief executive ofámarket research portal Auto-Dealer.ru.
Foránow, sales are onáa slippery slope. Customers are likely toábuy 2.8 million new vehicles this year, which would be aáfive-percent decline fromálast year, theáAssociation ofáEuropean Businesses predicted ináJune.
Kia cars now roll off assembly lines atátwo locations ináRussia. One is aáSt. Petersburg plant co-owned with sister company Hyundai Motors, which allotted Kia theácapacity toámanufacture 100,000 vehiclesáŚ now theáRio model, theáthird bestselling car brand ináRussia.
Kia can also order theásame amount ofácars fromáa Kaliningrad plant that belongs toáAvtotor andánow cranks out nine models foráthe brand.
TheáKorean car giant aims toásell 200,000 cars locally this year, including imports, meaning it will not utilize its full Russian production capacity.
If Kiaĺs main office decides toáadd local assembly lines, it may choose places other than St. Petersburg, Kim said.
Ináa declining market, Kia is one ofáa few brands that are going against theátide. It sold four percent more cars ináthe first seven months ofáthis year than ináthe same period last year, according toádata byáthe Association ofáEuropean Businesses ináRussia.
Kim attributed theárobust performance toáautomobile designs byáPeter Schreyer, aáGerman designer known foráhis work atáAudi, who joined theáKorean company iná2006. Ináaddition, Russians appreciate theáôyoung andádynamicö spirit ofáthe brand, Kim said.
With a seven percent market share, Kia trails behind theálocal auto industry champion AvtoVAZ andáFranceĺs Renault.
Ináorder toácapitalize onáRussiaĺs growing appetite foráexpensive sedans, Kia brought its Quoris model toáthe market in MarcháŚ theáfirst time theácompany introduced aáluxury car here, Kim said.
It is also taking proper note ofáthe growing popularity ofásport utility vehicles ináa country where anáincreasing number ofápeople can afford them forádriving through snow andáotherwise rough terrain. Kim estimated that theáproportion ofáSUV sales would bump toá38 percent ináabout three years fromáits current 33 percent.
Kim agreed with aácommonly held view that Russia could overtake Germany as theálargest European market forácars atásome point before theáend ofáthis decade. Russiaĺs relatively low number ofácar ownersáŚ approximately half ofáthe 500 vehicles per 1,000 people ináEuropeáŚ holds promise forágrowth. Also, more than half ofácars ináthe country are older than 10 years, meaning thereĺs a likelihood that owners will discard them foránew ones.
As aálarger number ofácustomers are about toástart shopping foráautomobiles, Kia is preparing toácounter theárenewal ofáthe affordable product lineup byáAvtoVAZ andáthe success ofáRenault ináthe low-cost segment with theáLogan model, Kim said.
ôWe are watching them closely,ö he said. ôWe have ů plans atáhand toárespond strongly toáthe offers ofáour competitors.ö