Kia looks to Europe for Sportage

KIA Motors Australia (KMAu) might switch sourcing of its popular Sportage compact SUV range to Europe to future-proof itself against supply constraints from South Korea.

The timing of such a move – should it eventuate – remains unclear, but the combination of a production surplus at Kia’s Slovakian plant and the strong Australian dollar relative to the Euro make it a viable proposition.

Kia’s sister brand Hyundai last month announced it would bring a new Czech-built variant of its related ix35 small SUV to Australia to complement the existing supply restricted range, but Kia will look to go one step further and move to sourcing Sportage from Europe exclusively.

According to KMAu public relations general manager Kevin Hepworth, the key tenet to any possible production switch is the company finding a way to hold its Sportage pricing structure.

The extra transport costs conspire against it, but strong exchange rates and the potential for support from either the factory of head office make it an easier sell. Hyundai has managed to keep pricing of its European ix35 and i30 wagon broadly similar to equivalent Korean versions present and past.

“There would be no benefit if you had to increase the price because of the supply side, and they’re the sort of discussions that are underway at the moment,” said Mr Hepworth.

The current petrol and diesel range is priced between $26,990 and $40,990 plus on-road costs, and competes against rivals such as the Mazda CX-5, Honda CR-V and Toyota RAV4.

The European Sportage is not much different to the current version, with Mr Hepworth saying any change to the car would likely kept to slightly different badging. It is entirely likely customers buying the car would be unable to tell the different between a Korean and European version.

Mr Hepworth said the strategy on Sportage was being considered as a possible means of avoiding likely future supply shortfalls, stating that even though local stock numbers have improved of late, the likelihood is that it will contract again in the future as larger overseas markets continue to boom.

“If Kia globally keep improving sales like they are, it will get pretty tight there (in Korea), because of the popularity of the vehicles,” he said.

“The only market in the world that is not going ahead in the same sort of pace as we are in Australia – up 22.4 per cent in 2012 – is the domestic Korean market.” Many of these other growth markets – that is to say, markets outside of Europe and the US which both house factories of their own – source their cars from Kia’s pair of Korean plants.

At one stage in 2011, the potent diesel Sportage had a waiting list of up to six months. Improving the wait times was likely a factor in the car’s 18 per cent sales growth in 2012 and 30 per cent jump in January 2013, and the company can ill-afford a repeat of previous supply restrictions.

The company’s $A1.3 billion plant in the �ilina region of Slovakia makes the Sportage for all of Europe, as well as the Cee’d small hatch and the Picanto light car.

This will expand to the Pro_Cee’d hatch from June, and potentially the GT range flagship should it get the green light to progress beyond the concept stage.

A 150kW/264Nm turbo version of the Pro_Cee’d is on the cards for Australia around the end of 2013 or in early 2014 – the company has filed a request with global head office to bring the car here – meaning Australia could potentially play host to two Slovakian-built Kia models.