Kia is experiencing rapid sales growth in the UK car market this year from its new Sportage model and expects incremental growth with the addition of the Niro hybrid later this year.
March was best ever month for Kia in the UK, with sales of over 16,200 units, about 8% higher than last year.
Growth this year for the Korean brand is being driven by the success of the new Sportage, which went on sale in February. Kia says it has taken 10,000 orders for the new car since then – which compares with 22,500 Sportage sales in the whole of 2015.
“We are pretty pleased with March and we also take a good order bank forward,” said Paul Philpott, Kia UK’s CEO. “We have got off to a strong start and it’s shaping up to be an exciting year for Kia in the UK market.”
Philpott says Kia is looking forward to another record year in 2016. The brand sold 78,500 units in 2015 and is planning on selling around 84,000 cars in the UK in 2016. “It could even be slightly stronger than that and get to 85,000,” maintains Philpott. “But much depends on the precise launch timings of new models due later in the year.”
Kia is planning on introducing its Niro hybrid crossover model with Korean production commencing in early May and UK sales starting at the end of July and beginning of August. “It is our first hybrid in a crossover segment that is booming,” says Philpott. “That could give us in the first full year on sale an additional 3,000 incremental sales.”
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Kia is also planning to expand its new Optima range this year with a new wagon body style (seen in Geneva) as well as a plug-in hybrid variant. “Both are due in September,” he says. “And September is a big month in the UK market with the registration plate changeover, so the actual timing will clearly impact the full calendar year number. However, the planned range expansion should take Optima sales from 500-1,000 units a year to around 4,000 units a year.”
UK EU referendum concerns: Kia wants stability
Philpott reckons the UK car market is on course for 2.7m units in 2016 (it was 2.63m units in 2015 and has just posted a record March with growth of over 5% for the first quarter), but acknowledges there is some uncertainty provided by the UK’s national referendum on EU membership, due on June 23, which could have consequences for the UK economy.
“As a global brand we like stability,” he says. “The British public will decide whether we stay in the EU or go. The SMMT survey of the automotive industry in the UK is fairly overwhelming in deciding that it would be better to stay in from a business perspective. As a global brand we would be part of that. It [EU membership] gives us stability. We know and understand the existing trade arrangements. If the vote is to stay in I think we will see a 2.7m unit car market this year.”
Philpott says a vote to exit the EU raises uncertainties that could impact consumer confidence and impact the car market. “If the vote is to leave, then I think we are in to unknown territory with a number of uncertainties for the economy, which can certainly impact consumer confidence and demand for big ticket items like cars.
“There are also other related factors to consider, such as currency exchange rates – euro and sterling in particular – and what movements might do for profit margins of manufacturers selling into the UK who make cars in continental Europe. There are a lot of unknowns.
“The next few months are going to be key in terms of seeing whether the full understanding of the economic impact of the decision is more widely appreciated and understood.”
Philpott is concerned about the potential longer term impacts of a UK exit from the EU. “If the decision is to leave, I don’t think there would be an immediate market collapse or anything like that,” he says. “But the period of uncertainty could persist for months or even years. The bigger impact, potentially, could be in 2017 and 2018 when the longer term uncertainties could start to unfold.”