Of the handful of remaining brands that haven't yet made inroads into the already crowded Indian passenger car market, Kia Motors is a prominent one. This South Korean brand has gone global and has had a blistering growth spurt during the last few years, especially in the mature markets of Europe and the US. So, it will be a surprise if the company continues to resist the temptation to enter the Indian market for much longer.
Rumours have been floating around that Kia is scouting for a location to set up its plant in India, and that the state governments of Tamil Nadu and Andhra Pradesh have offered land for the same. That the company is deeply interested was evident from last week's media round table organised by Kia and of which BusinessLine was part of. Company representatives continue to be non-committal and claim that the official stance is that "as of now no concrete plans have been finalised".
But, the visit to Seoul, Kia's hometown, and to some of the company's facilities, gave us a peek into the heart of the brand. And we are now even more convinced that despite its much delayed entry (potentially) into India Kia will diversify and expand the market across multiple segments of the passenger car industry here. Before we get into the specific highlights of the brand, here is some background.
Though Kia Motors is often identified as the sister brand of Hyundai, it is actually the older of the two in terms of its history of manufacturing automobiles. As a subsidiary of Hyundai, and as the second largest automobile manufacturer in South Korea, Kia's sales worldwide totalled over 3.3 million vehicles in 2015. The company has seen a huge revival in demand domestically and has witnessed a massive expansion into new markets, particularly the US, after Peter Schreyer took over as its Chief Design Officer. The ex-Audi designer sketched Kia's new design language, including its now famous 'Tiger's Nose' grille.
Shared platforms
Many of the company's popular models share their platforms with Hyundai's vehicles, including engines and transmissions. But, if and when Kia launches its cars alongside Hyundai's India models for India, the former will have a huge advantage over similar sister brands that are grappling with overlapping models. For one, Kia's models are not badge-engineered; they are very differently designed and kitted out, including, very often, featuring different dimensions too. For example, the Hyundai Santa Fe and the Kia Sorento share the same platform, but are very different from each other in terms of design and positioning. The same is the case with the Kia Sportage and the Hyundai Tucson which share the same platform.
Also, despite the lower pricing for some of its vehicles, Kia's model strategy sets it apart from Hyundai's as being more premium and luxurious, and its positioning is oriented towards buyers who are younger and more design conscious. The result, in the Indian context, could be a much better differentiation strategy than what Renault-Nissan or Volkswagen and Skoda have managed. The assumed, underlying product attributes for both Kia and Hyundai continue to be that they offer great value; but Kia models' interiors often trump Hyundai's cars in perceived premium quality. The younger target customer is also evident from the design and layout of Kia's showrooms, which sport a more appealing and sophisticated white-red colour scheme marking the brand's signature and its emphasis on customisation of its cars.
India strategy?
Kia's smallest car is the Picanto which is a popular entry model in Korea and now even in Europe. The brand's other popular small car is the Rio; both these cars are very different from the Hyundai Grand i10 and the i20. Kia's established expertise in developing models from the same platform, but which look very different, will be the ability around which its India strategy should hinge. Though there will be a certain degree of competing cannibalisation between the sister brand models, Kia's new cars will expand the market in these and the other segments in which it launches its vehicles eventually.
We believe that if and when Kia enters the Indian market, it will adopt a multi-vehicle strategy that will enable it to carpet bomb the market and capture share within a short span of time. From our perspective Kia should adopt a mid-down where it starts with a model in the sub-Rs 20 lakh price segment and go down to the premium entry small car segment. Kia has the cars to straddle all of these segments. And going by its growth in some of the challenging markets outside its own, it has the ability to develop new models that can help it break into new territory.
Finally, Kia's entry could also embolden other similar sister brands, such as Toyota's Daihatsu, which have stayed away from India till now.