As we sit and bite our fingernails waiting for South Africa's new car sales figures for the month of May 2020, which is expected to be the worst in the history of the local new car market according to several industry insiders, the cogs are slowly starting to turn for OEMs and importers.
KIA Motors says it's preparing for an onslaught of new models, aimed at cash-strapped consumers, as well as motorists who want to experience some fresh, new and exciting products after being locked in their homes for a few months
"Prior to the Covid-19 outbreak and subsequent lockdowns, we had elaborate new product plans for 2020. While the plans have not changed in terms of models, the timings of the introductions have. As things stand now, we anticipate introducing the diesel-powered KIA Seltos derivatives in Q3 of 2020, followed by refreshed versions of the KIA Picanto and KIA Rio in Q4," says KIA SA's general manager for marketing, Christo Valentyn. He is also optimistic that the brand will be able to launch the all-new Sonet in South Africa in the final quarter of this year.
A 'small' matter of affordability
One of the key challenges for the motor sector right now is dealing with the cash-strapped economy and consumers who are not in a position to commit to long-term finance contracts. Already, WesBank has reported that it has received more than 100 000 applications for payment breaks or financial assistance, and this is expected to rise as the government continues to enforce lockdown regulations. KIA Motors is confident that consumers will buy cars, as mobility is still a high priority for people considering the poor state of the country's public transport network.
"We expect the buying-down trend to continue, perhaps slightly more pronounced than thus far. Picanto and Rio are perennial favourites in our line-up, and we don’t see that changing in the foreseeable future," Valentyn adds.
He expounds that the all-new KIA Seltos compact SUV has been very well received since it went on sale in SA in November last year. "It had built up excellent momentum in the market for us, and we suspect it will continue to do well once the diesel derivatives arrive because it offers a substantial and credible alternative to SUVs in more premium-priced segments, and both its exterior size and interior capacity will ensure it doesn’t feel like a compromise for those looking to downscale," he adds.
Dealing with the price increases
There's no denying that the plummeting value of the rand is doing no favours for companies, particularly importers such as KIA, that have to "buy now" to secure stock for our market.
Valentyn explains that all of Kia's new models, and especially those that are still in the planned introduction phase, have been affected by the significant deterioration of the rand. "We anticipate price increases across the entire industry – there really is no way around it. That said, we believe there will be a significant gap between the published retail price and the transactional price due to the promotional efforts by all brands to encourage the market into purchasing," adds.
KIA, for example, has strong retail promotions in the market already, offering a six-month payment holiday on its Sportage, Sorento and Grand Sedona models; a deal that's particularly aimed at South Africans who need a new family car.
"We are looking to support local entrepreneurs and small businesses too, with the same six-month payment break offering on our K2700 and K2500 range of workhorses. We believe that these offers strike a good balance between cash flow generation and cash flow preservation, especially for customers who are looking to exit higher-end models early as part of the buying-down trend," Valentyn adds.
"It's important to know, however, that we have foreign exchange contracts in place that give us some leeway to assess the situation regarding the extended lockdown and lack of economic activity, as we believe the rand will strengthen once the economy is running at full capacity, thereby reducing the extent of future price increases," he says.
The right vehicles for the right time
While there's no doubt that the forthcoming Picanto and Rio updates will arrive just in time to excite South Africans later this year, they are also very important cars in terms of the segments they represent. Kia Motors expects the A and B segment to flourish, while the B-SUV segment is also expected to attract more customers as they look for all the trimmings, but at a reasonable price.
"This is why the new KIA Sonet is a very important car for us. It has all the right design details and features and is ideally suited to our market as we expect to price it as competitively as we possibly can considering the current circumstances," Valentyn concludes.
In summary, these are the models Kia plans to launch in SA
KIA Seltos diesel derivatives: Q3 2020
KIA Picanto facelift: Q4 2020
KIA Rio facelift: Q4 2020
KIA Sonet: Q4 2020
Be sure to follow KIA JBAY social media and to watch this space for more details, prices and local specifications closer to the time of launch.