After a fairly exuberant launch and run of Sportage, Grand Carnival and Picanto— the company is selling about 1500-2000 units every month (approx. 12,600 units sold in 7MFY21)—Kia is ready to introduce Sorento, a crossover SUV to the market; adding to a range of new offerings in the segment as the market evolves out of the sedan-mindsight.
The new model that will start booking coming Friday has three variants on offer powered by a 2.4L (AWD and FWD) and 3.4 V6 (FWD) engines and is estimated to be priced between Rs7 and 9 million, though official prices have not been announced. Comparatively, Toyota Fortuner which runs on 2.7L and 2.8L is priced between Rs7.7 to 9.4 million. Market expectation is that Sorento that will shake-up some market share captured by Fortuner and will be priced slightly lower, with a difference of roughly Rs0.5 million and has a premium engine in the line-up at a cheaper price point. This potentially tilts favors toward Sorento specifically as the model will enjoy the novelty factor, being a new shiny addition to the market.
Kia is a rising star in the international market. In the JD Power Initial Quality Study, the company has been on top for six consecutive years when evaluating mass brands for initial quality. In the Pakistani market, Kia has done tremendously well since its initiation, turning a profit within a year of the launch of its three models. Latest accounting from Lucky Cement’s consolidated financial statements suggests the automobile segment’s revenue turnover has nearly quadrupled from Rs12 billion in 1HFY20 to Rs44 billion in 1HFY21 (1HFY19: Rs638 million), recording an operating profit of Rs 3.6 billion in 1HFY21 against a loss in the corresponding period last year.
The SUV segment is itself growing—Fortuner for instance sold about a 100 units every month in the seven-month period last year which has grown to 238 monthly units in 7MFY21—its share in the passenger car and SUV category growing from 1 percent to 3 percent on a monthly basis. There are a handful of other crossovers that are planned or have already been launched which are moving the market into a different direction altogether.
From the consumer perspective, Sorento has the passenger/cargo space of an SUV with the driving experience of a sedan/hatchback. Though it is no way near priced close to the sedans in the market, it is likely to capture a small but growing market of consumers that seek a larger and safer vehicle with a sleek exterior and a powerful engine to boot.
Kia is strategically covering several segments of the automobile market where Sorento will sit right between Sportage and Grand Carnival from a price perspective. Picanto is capturing the mid-sized passenger car segment while Sportage, Grand Carnival and Sorento together are capturing the higher end sedan and SUV segments. The company’s strategy is compelling and evidently working—a new model (maybe a compact sedan like Rio) launch over the next year would give Kia a foothold and an opportunity to grow in each segment of the market.
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