Kia released on Monday in China its K9 premium sedan, a car model which has registered insignificant sales in the U.S. and South Korea.
This is a part of Kia Motor Corp’s and Hyundai Motor Co’s plan to profit from the world’s biggest auto market as to increase their sales of high-end cars that get larger profit margins and also raise the profile of the brands’ car models. However, Kia is launching its K9 at a time when the auto market is struggling in terms of growth and the economy seems to be heading towards its slowest expansion rate registered in 25 years. Moreover, Kia does not produce premium cars in its neighboring country, which causes high-end imports like the one of the K9 to import duty of more than 20%. Analyst Chae Hee-guen at Hyundai Securities stated that “A strong preference for German cars in China will make it even more difficult for Kia to penetrate the premium segment there.”
Released in 2012 in South Korea with a target of 2,000 cars sold monthly, Kia only managed to sell a total of 4,429 for the entire year of 2014, which was 12% less than in 2013. In addition to that, Kia succeeded to sell in the United States only 1,330 models.
Asia-Pacific managing director at IHS Automotive, James Chao, explained that even if sales might not be high, entry-premium models like the K9 are of extreme importance for automakers like Kia to win over customers who are looking to upgrade. Chao added that Hyundai-Kia from a brand perspective is lower than their German competitors, but it is ranking higher that the local Chinese brands, which makes the K9 even more important as part of the strategy for the image and the Kia brand.
By Gabriela Florea