Kia-Lucky Motor’s strategy to penetrate local auto market dissected and evaluated


Kia-Lucky Motor has been in the Pakistani automotive headlines for quite a while now. There has been a lot of discussion about its upcoming vehicles, in particular, the Grand Carnival. However, there has been minimal talk about the company’s long-term prospects or its “Grand Plan” (pun intended). A lot of questions linger in the minds of consumers and enthusiasts alike. To answer these questions, we need more information, this need for facts warranted a visit to the Kia dealership. So this piece of writing will be about my visit to the Kia dealership adjacent to Lucky One Mall in Karachi, the things I learned and Kia’s big bet on Pakistan’s automotive industry of tomorrow.

The Dealership:

First impressions are key when it comes to this front and Kia Motors delivers, establishing a dealership right next to one of the most fashionable malls in the city is a commercial masterstroke. With the exception of prospective buyers and enthusiasts, no one visits a showroom/dealership. However, the opposite is true for a shopping mall, so Kia-Lucky (and by extension, its vehicles) will get the attention they need. This approach for advertising and promotion is reminiscent of the strategy Tesla Motors used and their commercial success needs no introduction. Creating a ‘presence’ in the local market pays dividends when it comes to sales figures and popularity, this ‘presence’ and a massive network of 3S dealerships are why Suzuki, Honda and Toyota are doing so well in the local market.

RELATED: Alloy Rims for Sale

The dealership’s staff was cooperative and very liberal with the vehicles on display. I was able to see and photograph the cars from the inside, which was a pleasant surprise. Soon afterwards, introduced to a sales representative who seemed well-versed with their facts. So I began with my slew of questions:

More Models?

kia lineup

It goes without saying; we want more cars from Kia. When I asked the sales rep about this, they were quick to point out that the only vehicle up for sale is the Kia Grand Carnival, but none of this is new, so I kept on going. “We have many models that are being road tested even as we speak.” They added: “You have only seen what we have shown you.” (Referring to the Sportage and Grand Carnival). I disagreed since I have been keenly observing Kia both internationally and locally for quite some time and thus inquired (yet again) about what models we can expect from Kia, to which the reply was “It is not confirmed as of this point in time; however, we are performing rigorous R&D and testing Picanto, Rio, Sportage and Optima on Pakistani roads to see what is feasible for this market”

VA_47b5700854ae4be5ad76152367ba8145.jpg

I was taken aback when I heard “Optima”, which refers to the Kia Optima, a full-sized sedan designed to go against the Toyota Camry‘s and Honda Accords of the world and is (in my opinion) not a good match for the Pakistani market. Seeing this reaction they said “Surprised? We’ve got many surprises coming for you.” Indeed, these people are sticking to their “The Power to Surprise” motto. The big hurdle that stands in their way is demand. Let me elaborate; Kia’s production plant is not yet ready, and they are only allowed to import a limited number of CBUs for commercial purposes. So if this limited number is sold out, they will face (according to them) a 6-12 month gap in delivery which is not good for business. Instead, they are resorting to a strategic timeout to build certain ostentation or hype around their vehicles (the Kia Rio being a prime example). So with all of the above considered, we should receive the Sportage around late 2018 to early 2019, when local assembly can begin. Shortly followed by the Rio and Picanto. But I also expect a few “surprises” along the way.

Kia Rio?

Like many of you, I am really interested in what Kia has to offer in the budget category. Kia Rio has been a dominant force in the subcompact hatchback segment ever since its inception in 2000. There have been a number of speculations and rumours about the launch of this elusive hatch, so naturally, I asked for clarification. I was told that a 1.0L Turbo engine is in the works and they have received commendable response from the consumer (from the samples on display in Lahore and Shahrah-e-Faisal showrooms). However, it may not make the cut due to concerns about fuel quality and increased costs and manufacturing complexities. While they were stringent on not giving any information about release dates, I expect to see it in mid-2019, after the more profitable Sportage model rolls out.

Quality and Reliability:

Kia has stepped up the game when it comes to build quality, and the cars on display were no exception. The panels gaps were immaculate, and the interior felt well put together, and all the surfaces I touched felt high quality. Naturally, I asked whether this quality would be exclusive to Kia’s high-end CBUs? They were very confident saying no and internationally Kia has raised the bar when it comes to quality and reliability but any comments about long-term quality would be premature at this point in time. The fact that Kia offers an unrivalled 4-Year/100 000km warranty is a good indication. However, no definite conclusions can be made on this front as well.

Grand Carnival…A monetary loss?

Okay, this is interesting; a comparably equipped Grand Carnival costs $32 000-35 000 in the international market, we know that the base model Grand Carnival will set you back PKR 3 999 000, which is intriguing since the government levies a lot of taxes and duties. So it is speculated by many experts that Kia is subsidising the Grand Carnival. When this question was brought up, the representative was quick to deny this claim saying “No manufacturer incurs a loss on any model”, but when we know that is not the case in the automotive world. Upon further questioning the representative opened up, “Do you think any manufacturer operating in the greenfield plane can make a break-even on its investment in less than five years?”. “We have spent tens of times the cost of a Grand Carnival on adverting and infrastructure.” This confirmed the speculation for me, Kia (in a move that is, again, similar to Tesla Motors) is selling the base model carnival for a slight monetary loss and is most likely relying on customers to go to higher trim level or include option packages to make a profit. This method of self-promotion through quality products is commendable since the manufacturer is now relying on its products to make an impression.

Final Thoughts:

Kia-Lucky’s determination and commitment to quality is clearly manifested through its unorthodox strategy. Perhaps the most telling thing about Kia’s plan was revealed when I asked them about Hyundai-Nishat motors, the intriguing Hyundai-Kia sibling rivalry and how they intended to stand out against the competition. To which they simply replied,

“We are here to play our own game and not compete with anyone else, if we were here for competition we would have started with a sedan (referring to the ever-popular Honda City and Toyota Corolla)”. “But here we are, with Pakistan’s first locally available 11-seater MPV.”

So it goes without saying, Kia-Lucky are here to stay, and I think they have long journey awaiting in the Pakistani Automotive industry.


Automotive Journalist at PakWheels. Loves Talking and Writing about Cutting-Edge Cars and Modern Technology. Former Student of Bahria College. Resident EV-Guru.

Notable Replies

  1. aa78 says:

    You should re-emphasize their confidence in their product with regards to how they are easygoing with customers taking photos of their cars while Atlas Honda dealerships put large warnings in showrooms prohibiting photography when their customers shared photographs of abysmal quality of the then new Civic 10th Generation cars still standing at showrooms. It is a markedly different and better attitude and confidence in their product by Lucky Kia.

  2. i visited the showroom, just calculating the cost of kia .......this is strange, the staff at KIA told us only about 18K transport and 200,000 registration.

  3. Sportage and Grand Caravan have a very very limited market in Pakistan. Maybe a few hundred per year. They should try and advertise their econo cars most as majority of the car buyers here can only afford such small cars. Even an Optima will find not that many customers here as say a Civic.I hope Kia doesn't get misled by shallow surveys conducted in posh areas of cities.

  4. Just launch a midsize sedan at good price...and they can easily penetrate pakistani market...the pakistani market is pretty simple to.understand..no suvs or mpvs or anything...just a good midsize sedan and that is it...

  5. I agree :+1:

Post a Comment

3 more replies

Participants

  • Muhammad Muaaz

    Disappointing for us if this article is to be believed coz we want competition, and the last paragraph sums it up,, kia needs to take up against the likes of big three so that consumers can take a breath of calmness at least now..

  • Umar Sohail

    Not really, what they meant was in the philosophical sense. Think about it, they came here to express their ideology but ultimately they will end up competing with the big 3. For example the Kia Rio may not be a direct competitor to the Honda City or Toyota Corolla, however it will insha’Allah give them a run for their money with its supposed superior build quality, attractive price, great value for money and waft of features.

    Happy PakWheeling!
    Regards
    Umar Sohail

  • Muhammad Muaaz

    Optima and Sportage doesn’t compete with any of the existing cars plus Rio is pending for a long time, don’t expect picanto to be anytime sooner than 2019 mid year, so yeah they will wait for the competition to begin automatically, like the other manufacturers jump in and start bringing some heat then they will launch the mass sellers.. not a good news for us,

  • Abid Shaukat

    Very disappointing with the new car companies which still not sure how to introduce some budget cars which is easily purchase by common man but look at this Kia introduced a big 11 seater with more than 4 million rupees price tag who can buy this car they first study the market than introduce their models if they want to compete with Honda Suzuki and Toyota.
    Very disappointed.

  • Mr. Viscous

    Cerato/Forte should’ve been on their radar rather than Optima. Would’ve been much more popular in our market.
    Maybe they know that Pakistan doesn’t have a locally produced large sedan and they want to capitalize on that. Since both it’s competitors the Accord and Camry are sold as CBUs and cost close to 1 crore, they might be contemplating on launching the Optima in 4-5 million price bracket to capture this (rather small) share of the market.

  • Abbas Khan

    As explained, they are intentionally delaying the budget version/ fast selling vehicles so that the sale of limited amount of CBU’s reconcile with their factory production. This is done to ensure that there is not a big gap between sale of CBU’s & locally produced versions, hence trying to exploit people’s excitement about new vehicles to the maximum!!!

  • Muhammad Yasir

    good explanation

  • Muhammad Yasir

    i am disappointed too …

    but i am willing to wait for next summer to see how things pan out

  • Muhammad Yasir

    Good article / interview

    we need more of these kind with other newcomes like Hyundai, Datsun and co.

    we need to know the intentions of all of them !

Top