Kia’s success in India – a lesson for others

Little more than a year... it has already raced ahead of Mahindra and is now number 4th in market share

Kia launched it’s first model Seltos in India in August 2019, followed by Carnival in February 2020 and most recently Sonet in September 2020.

In October 2020, Kia sold a total of 21021 vehicles, accounting for 6.3% market share of total car sales in India. This is significant for the following reasons –

  • 6.3% market share puts Kia at 4th position in the industry behind Maruti, Hyundai (a sister concern) and Tata. This means its ahead of our good old Mahindra (of Scorpio and XUV fame), Toyota (of Innova fame) and Honda (of City fame). I don’t think anyone expected this a year back when Kia was launching it’s first vehicle.
  • These numbers are mostly contributed with just two models – 3rd model Carnival being a super premium MUV with a niche market.
  • Also based on channel checks, I did get a feeling that Kia faced production and logistics challenges – being it’s 1st year of operations. The demand for vehicles was overwhelming and much better than the expectations. This along with it being a new Company, made Kia lose some customers.

Hence, Kia can be considered a commendable success and should serve a strong lesson to existing and new players who never had much answer on how to compete against Maruti’s leadership (an undisputed leader of the Indian car market – cornering more than half of total sales).

Kia’s success can be attributed to…

  • Proper brand positioning (a subtle pre-launch noise about legacy and global presence creating customer curiosity)
  • Assurance of reasonable service standards (leveraging on established positioning of Hyundai in this regard)
  • Great segment and product selection (compact SUV – the most growing segment)
  • Premium looks (unlike anything else in that price segment)
  • Attention to details (checkout their components quality and technological offerings)
  • Value for money product (good pricing – neither too high, nor too low)

Here it would also be pertinent to mention that it’s a misconception that Indian consumer doesn’t look beyond Maruti. Most of the times we forget that though Maruti contributes 50% of the numbers…. but then 50% are also contributed by the others.

Besides, time and again one sees that Indian buyer does provide reasonable chance to good models e.g., Renault Duster & KWID, Ford Ecosport, Honda City, Mahindra Scorpio & XUV etc.

However, problem comes when the Company starts taking buyers for granted based on success of one model and starts offering either half baked products with poor components quality (many GM, Mahindra and Tata Models) or completely non value for money products (e.g., Renault Captur, Tata Aria).

Yes I agree that it’s too short a time to take any comfort on Kia in that regard. It would be interesting to watch Kia’s ability to sustain the momentum. However, a comforting fact – most buyers seem to be happy with their products. No major complaints and hence no negative word of mouth marketing so far !

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About the author

Nitin Jain

A finance professional with around 20 years of investing experience in Indian markets both on buy and sell side, equity and debt, private and public with some of the best organizations globally including Goldman Sachs, ICICI Group, ICRA and others. He is a All India Silver Medalist CA by qualification.

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Kavin
Kavin
1 month ago

Its a good analysis but I still feel their customer service is pathetic and this might become their undoing if they don’t improve on it. This is basis my personal experience not one or two times but multiple times. Secondly Kia Seltos seems to have some quality issues as read on some prominent car portals

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