Though Suzuki called the introduction of its locally assembled Alto660cc “the biggest reveal of 2019”, the real showstopper at the auto show in Karachi was Kia. The company is one of the two new entrants that displayed its vehicles to the larger public with passenger car offerings ranging from a sports sedan to a crossover subcompact, a compact SUV and a 1000cc hatchback with booking starting in Jun-19 and delivery between Aug-Oct 2019.
The South Korean automaker that recently joined hands with the Lucky group is investing $175 million in Pakistan to produce a capacity of 50,000 units annually similar to Honda’s existing production capacity. Kia has been showing its Grand Carnival, the 7-seater luxurious vehicle across dealerships since June last year costing upward of Rs3.99 million ex-factory.
Next in line are Kia Sportage and Kia Picanto. The former is a cross over SUV, which is a global bestseller for the company with an engine capacity of 1.6L to 2.4L. Sportage could compete with Honda BR-V and Suzuki Vitara though the former has a better reputation in the market. Meanwhile the hatchback could directly compete with the likes of Suzuki Cultus and Wagon-R. The 1000cc car segment is the only one growing at the moment as demand for other vehicles wanes and Picanto may capture a few more eyes.
Market estimates suggest that depending on the engine, Sportage could have a starting price as low as Rs2.5 million while Picanto would cost roughly in the range of Rs1.5-1.6 million, closer to the cost of Cultus. Caution that there is no official word on the prices and specs of vehicles at the moment. Meanwhile, car enthusiasts are really looking forward to another global favourite Kia Rio to make its presence in the country, which competes with other fan favorites like Toyota Vitz and Aqua, both popular imports into Pakistan.
Kia will initially be localising at 15 percent, which may pick up pace as volumes grow, though it all comes down to the demand. Cars like Sportage and the luxurious sports saloon like Kia Stinger may get better margins, it is clear that the volumes will come in the mid-range category of cars. While numbers are unavailable for CBU sales, in local assembly, only about 13,000 units of Toyota Fortuner and Honda BR-V were sold in FY18, against over 200,000 passenger cars. Majority of that was in the 800cc-1000cc and above category.
Evidently, Rio and Picanto will grab higher volumes (if/when introduced), but with the current slowdown in the economy, inflationary pressures and monetary tightening, ‘tis may not be the season to be a jolly car buyer. One could be wrong. In 9MFY19, Cultus sales grew 9 percent, Wagon-R 18 percent and Corolla 12 percent cumulatively year on year despite price hikes in the range of 18-22 percent and a much higher cost of financing. Consumers are clearly not as highly sensitive to prices and new models always create a renewed sense of excitement.
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