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Is Kia thinking of launching a subcompact SUV in Pakistan?

SAMAA | - Posted: Sep 25, 2020 | Last Updated: 4 weeks ago
SAMAA |
Posted: Sep 25, 2020 | Last Updated: 4 weeks ago
Is Kia thinking of launching a subcompact SUV in Pakistan?

Its management is tight-lipped but Kia Pakistan looks aggressive after successfully launching the crossover SUV Sportage. It is now pondering launching three or four more models and subcompact SUV ‘Sonet’ could be one of them.

The Auto Development Policy 2016-21 will end in June 2021 and industry sources say car-making companies, called ‘new entrants’ since they came in the aftermath of the policy, have been trying to launch the maximum number of models they can before the policy ends.

By launching cars during this period, the companies will be able to get tax incentives for five years under the government’s scheme that announced the policy to boost the auto industry and facilitate competition. Japanese Suzuki, Honda and Toyota were the dominant industry players before new entrants Kia, Hyundai, Changan and Nissan entered the market post 2016.

Kia, a Korean company backed by the Lucky Group, has shaken up the car market in Pakistan, which has been a bit dormant with respect to launching new car models. Market sources claim that Kia has been able to sell between 8,000 and 12,000 units of the Sportage during the last year.

Kia dealers have also confirmed that talks are rife within the company that it will launch the Cerato sedan by December. The Cerato, which comes in 2000cc and 1600cc (approx) engine sizes will be a direct competitor to the Honda Civic and Toyota Corolla. According to reports, it will be priced between Rs3.1 million and Rs3.7 million. 

A key official of the company confirmed that they were studying several Kia cars that would cater to the needs of the local market, meaning cars that could sell in Pakistan.

Although the official declined to mention which models are on the cards, the company’s Facebook page has requested followers to give feedback on the Sonet, a 1200cc petrol and 1500cc diesel compact SUV. The Sonet was recently launched in India.

Shakaib Khan, an MBA from CBM running SK Motors Syndicate, says the Sonet can be considered a competitor to the Nissan Juke, Honda HR-V and Suzuki Vitara for their five-seat capacity. But it has a smaller engine so it is not an exact competitor.

“It can be said that it may be a close competitor to them but not exactly the same as these cars have bigger engines,” said Khan. “Sonet category, subcompact crossovers, are a gap in our market.”

Kia CEO Asif Rizvi had said during a presentation about the Sportage around its launch that a compact crossover SUV will cater to the vacuum between high-end sedans and SUVs – roughly between the price tags of Rs4 million and Rs8 million.

Kia officials were very tight-lipped and declined to share more details about car models or units the company sold so far.

According to JS Global Capital research analyst Ahmed Lakhani’s sources in Kia, the company wants to launch four new cars after the Sportage, Picanto and Carnivale by the end of the 2021 fiscal year.

This may include another SUV Seltos or the Sonet, Cerato and two more SUVs.

“The auto industry is moving towards SUVs all around the world,” Lakhani said. “And after the recent rains, SUVs have become all the more important in Karachi.”

Following the historic rains and urban flooding in Karachi in August, people were seen leaving their bikes, hatchbacks and sedans at their offices and returning home in SUVs and pickup trucks after getting favors from friends and family.

Lakhani says that according to his assessment, the price of a car launched in India is normally sold at three times the price in Pakistan.

“I have assessed the showroom price of cars in India and their similar models of the same company in Pakistan. I think it is normally 2.5 to 3 times the price in Pakistan compared to India for the same car,” he explained.

Lakhani says three factors determine the three-fold price difference of cars in Pakistan and India. The Pakistan rupee is less than half of the Indian rupee value (one Pakistan rupee is equal to 0.44 Indian rupee), India has economy of scale and lower taxes on automobiles compared to Pakistan. 

Sonet’s price in India is between INR671,000 and INR1,200,000. Lakhani says if that’s the case, it should be launched from Rs2 million for the basic model. But this price range is too similar to its already launched hatchback Picanto.

“If it’s launched, I think Kia may put price tags in the range of Rs2.5 to Rs3million (for the basic model),” Lakhani said.    

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