Kia says small cars here to stay with launch of new Cerato

Despite the continuing onslaught of SUVs and utes, Kia Australia's Chief Operating Officer Damien Meredith is bullish about the segment’s ongoing viability.

Speaking this week at the launch of the brand’s best-selling car in Australia, the Cerato, Meredith believes Kia’s extensive range of small cars - Picanto, Rio and Cerato - will continue on for some years.

The Cerato’s sales are still strong, racking up 1500 sales per month, while growing market share due to the segment’s overall decline.

Meredith says that the drop in small cars amounts to 20 per cent year-on-year for 2019 and 2020. For the previous four years that figure was eight per cent, pointing to the obvious acceleration of the decline.

5

“We’ll keep a very close eye on it. Our market share will continue to grow in the small segment and in light and micro with the Picanto and Rio. We’re basically the only manufacturer offering three passenger cars. We believe it’s been of benefit to us," the Kia boss said.

"We think there’s still a fair bit of length left in the small car market in Australia. I think we’ve got at least five more years of reasonable volume with the Cerato. The market will hold up to give us that volume.”

When asked if this Cerato would be the last, he was very clear.

“No, definitely not.”

The next Cerato, due sometime in 2024 or 2025 is under development and will include electrified offerings as well as petrol.

Kia’s market-leading seven-year warranty has its seventh-birthday later this year and Meredith believes it is part of a story of consistency which has contributed to the success of Kia and the Cerato in particular.

“The consistency has helped us dramatically,” said Meredith. “It has been incredibly successful for us and it has helped develop our sales and helped grow the brand. We’re very, very happy Korea gave us the go-ahead. It’s been sensational.”

5

Kia believes in the time the warranty has been part of the Kia package, it has gone from the number one reason a customer would look at a Kia - the “opener” you could say - to now being the third reason and considered the “closer” for dealers.

For the first four years, 40 per cent of customers said it was the most important reason, but now manufacturing and design have moved ahead of the warranty.

The prospect of a longer warranty is something Kia is looking at. With Mitsubishi pushing its caveat-laden ten year warranty, Kia no longer has the pace-setting number to put on its marketing even though its seven year warranty provides unlimited kilometre coverage versus Mitsubishi's limited-warranty.

5

“We’re always looking at it," said Meredith. "There have been other priorities in regards to what we need to do. We’ve got a new logo, new design cues for our dealerships, that’s where our energies are going at the moment. From a commercial perspective it’s not a good idea to be launching a new logo that’s fresh, young, looks energetic and then lifting that [longer warranty] up. If we did it, it would have to be at a time that’s going to be of benefit to us.”

Meredith suggested a move to a longer warranty would be permanent, rather than past efforts from makers such as Honda and Holden which offered longer warranties for limited periods.

“We’ll continue to look at what’s happening in the marketplace. We always have and will continue to be consistent, whether it’s with warranties or drive-away pricing. That’s also helped us dramatically.”

5

Kia came third in the sales figures in May, and not for the first time. There’s still a huge gap to catch up to Toyota. Much of Toyota’s lead is made up of the HiLux. Meredith is keen for such a vehicle and believes, while it may not bridge the gap, it will prove a huge boost to Kia’s sales.

“I think if we ever did that type of vehicle, we could probably [sell] 20,000-25,000 per year.”