Kia focuses on private sales in Aus

KIA'S growth in Australia will not be underpinned by rental sales, with the increasingly popular brand focussing on expanding its presence in the private new-vehicle market, according to a key local executive.

The Korean car-maker joins a growing list of automotive brands that have elected to keep their sales to rental car companies to low volumes, if at all, with some citing impacted resale value as well as brand perception.

Speaking with journalists at a media event in Melbourne this week, Kia Motors Australia (KMAu) chief operating officer Damien Meredith said the car-maker has a set number of annual rental sales that it will not exceed.

“I have a golden rule,” he said. “Keep it under five per cent, it is well and truly under five per cent. This year we will probably do 39,000 cars and direct rentals will be 800 (units).

“Now that’s us (KMAu). Sometimes dealers will sell cars to rental companies, but that’s direct sales. In regards to those it’s about 1200, so about 100 a month the dealers will sell to small rental companies like Apex.”

Mr Meredith said he was happy with the overall tally of 2000 rental cars this year, adding that it was not as big a focus for Kia as it was for some other top-selling mainstream brands.

“We are not going to dominate the rental car market. Hyundai are bog in that, Toyota are big in that. We are not. It is just the natural progression.” Kia's sales split in Australia, according to Mr Meredith, is 50 per cent private sales and 50 per cent business sales, which are made up of rentals, large fleets, small fleets and proprietary limited small businesses.

Of the 457,375 SUVs, passenger cars and light-commercial vehicles sold in Australia so far this year, a little over half (231,996) were private sales, while businesses took 188,013, rental sales totalled 20,108 and government sales at 17,258.

Mr Meredith said some of Kia's sales in recent years have been made up of returning buyers, as well as buyers coming across from other brands.

Left: Kia Motors Australia COO Damien Meredith.

“Three things are happening. One thing is we are getting back some old owners that disappeared for a vehicle and are coming back. Second thing, we are definitely getting used-car buyers that are buying obviously Picanto, but also there is some of that in Cerato. And thirdly we are pinching a little bit from the Japanese.

“Are we taking any from Hyundai? Not really. Probably they are getting six, we are getting six so it evens out. The aim has always been to look at 88 per cent of the market that Hyundai and Kia don't get rather than the 12 per cent that they do get.”

In terms of individual model sales, Mr Meredith said he was satisfied with the registrations for the Sportage mid-size SUV that launched in fourth-generation guise in January, but acknowledged that it could be performing better in its segment.

“Sportage is about 750-800 (units) month in month out. That's pretty good. We would like that to be about 1000. To get that jump is not that great but it has been a great car for us, a great car for dealer network. We are relatively happy with that volume but there is upside there.

“Our intention is to keep plugging away from a communications point of view with Sportage. We may look at a driveaway program for Sportage in months to come. But at the moment we are relatively happy because if you go driveaway, we have to put more money into it, the dealer network has to drop their margin a little bit to help pay for it. So you have to balance that – dealer profitability, our profitability, market acceptance, what volume do you want.”

Sales in the overall mid-size SUV segment are up by 21.8 per cent so far this year and Kia has recorded 4143 Sportage sales to the end of May, a 27.6 per cent lift over the same period last year.

In year-to-date sales, the Sportage trails the segment leading Mazda CX-5 (9950), Hyundai's Tucson (8128), Toyota RAV4 (7640), Nissan X-Trail (7518), the Subaru Forester (5848) and Mitsubishi's Outlander (4180).