Case Study: KIA Motors in INDIA –
Will it survive or Will it fail...
Professor
KIET
School of Management
KIET
Group of Institutions, Delhi-NCR, Ghaziabad
Kia
Motors Corp., entered in India’s automobile market, to establish the
brand with focus on more volumes and market share rather than on profits. The
South Korean Hyundai Motor Group subsidiary before introducing its electrified
vehicles in India thoroughly understood the government plan to set up
infrastructure and other needs of electrified mobility.
The managing director and chief executive of Kia Motors India, Kookhyun Shim said in an interview “Kia’s philosophy is more about being a sustainable brand in India for the long term. We have learnt a lot of lessons from other competitor brands. So, we want to be the most loved in the first stage". 2 Kia with its initial investment of $1.1 billion in India will be unable to become profitable soon.
KIA unveiled its first
product, Seltos which is a Sport-Utility Vehicle (SUV) aimed at challenging
Indian SUV customers which has other strong players such as Hyundai, Mahindra
and Mahindra Ltd. and Tata Motors Ltd. The new entrant SAIC Motor Corp. of
China and France’s Groupe PSA will make more competitive segment.
In such a scenario of stiff
competition, Kia has set an aggressive goal of becoming the 5thlargest
automaker in India in the upcoming five years. To meet its goal, the company
planned to launch4 new models over the coming two years.
Therefore, in the
present extremely competitive Indian car market, that is owed to be the world’s
third largest till 2025, how far Kia’s entry and philosophy of being sustainable
brand in India is wise.
Indian Auto Market Status
In 2018 India with
the increase sale of 8.3 percent yearly to 3.99 million units became the 4thlargest
cars and 7thseventh largest commercial vehicles manufacturer.
The auto market has
dominance of two-wheelers segment with 80per cent share in the domestic automobile
sales in FY19 (Exhibit 1). The dominance is due to large number of rising middle income and a youth population.
Further, the rising interest of the auto firms in taping the rural markets
further facilitated the growth of this sector.
India being a leading
auto exporter have strong growth expectations of export in the upcoming years.
The growth of Automobile exports during FY19 was14.50%and is expected to grow
at a CAGR of 3.05%from 2016 to 2026. Moreover, India is expected to be a market
leader in the world by 2020 in the two-wheeler and four-wheeler segment via
various initiatives of Indian government. (Exhibit -2).
KIA Motors Corp.
The word Kia has an
interesting Korean meaning in two parts. “Ki” means “to come out” and “a” means
“east.” Thus, translated to mean, “to
come out of the east” that is a company that belongs from East Asia and serves
to so many countries across the globe.5
In May 1944, Korean
oldest motor vehicle manufacturer Kia Motor Corporationsbegan its journey with
making of bi-cycles and motorcycles. Gradually this subsidiary unit of the
global Hyundai-Kia Automotive Group became the fifth largest world’s automobile
manufacturer. It produces around 1.4 million automobiles annually in 8
countries fromits fourteen-assembly operations manufacturing unit. It has annual
revenues of around US$17 billion with its strong distribution network of 3,000+
distributors and dealers across 172 countries.
KIA’s Entry in India
In August 2019 the
Auto sector witnessed its worst drop in demand in last twenty years. Sales of
domestic vehicles was constantly declining from April till September 2019.
Automobile brand Kia Motors though broadcast in 2016its entry in India and
since then were quiet, until launched its first product for the Indian market –
The Kia Seltos – during the festive season in October, 2019. Interestingly,
just eight months before the launch, very few in India had even heard about the
brand. Still KIA has some crazy ambitious announcements of ranking itself in
the top five automobile providers of India in next three years.
It invested $1.1
billion (about Rs 6,900 crore) in building up the lavish manufacturing plant of
536 acre in Andhra Pradesh’s District Anantapur of India. The plant with a
capacity of manufacturing 3,00,000 units annually has environment-friendly
infrastructure with well-equipped AI building and its most advanced robotics
technology8. To retail such units of cars KIA came up with its
aggressive marketing strategy.
Elements of Marketing Mix Strategy
Product
Kia Motors a public
Korean company is ranked as one of the top manufacturers for its estimated 1.5
million units per year sales figures. It is a brand known for its exclusive, vivacious
and credible range of automobiles. The product range includes trucks,
passenger cars and SUVs along with military, transportation vehicles and other
variants9. (Exhibit-3)
Kia Motors has made
its debut in the Indian market with the launch of its first product, the Seltos
which is a mid-size Sports Utility Vehicle (SUV). It is targeted at the robust
Indian SUV market, which has players such as Hyundai, Tata Motors Ltd, and
Mahindra & Mahindra Ltd. The segment has more competition with the upcoming
entry of China’s SAIC Motor owned MG Motor and Groupe PSA of France. Despite
the competition, Kia with its most aggressive strategy for India plans to
introduce four new models over the next two years. Presently the popular Kia
cars in India include Kia Seltos and Kia Carnival. The Kia cars in
India will rival some of the popular models for top brands like Maruti Suzuki
India and Hyundai India10 that have announced plans to offer electric vehicles
in India in 2020. Kia has also invested in making its plant in Andhra Pradesh
ready for electric vehicle assembly.
Apart from the
Seltos and Carnival, Kia Motors has planned a few more product launches across
segments. Around 9 upcoming Kia cars like Kia Stonic, Kia Sonet, Kia Soul and
Kia Xceed will be launched in India in 2020-2021. Among these 9 upcoming cars,
there are 2 Sedans, 4 SUV and 3 Hatchback. (Exhibit -6)
KIA Seltos
Kia offers the
Seltos in Tech and GT Line. The Tech Line is offered in five variants -- HTE,
HTK, HTK+, HTX, and HTX+ -- price range varies from Rs 9.89 lakh to Rs 16.34
lakh. The GT Line which means Grand Tourer (GT) is a kind of
sports car that is made for high speed and long-distance driving,
along with performance and luxury attributes. It is offered in 3 variants
-- GTK, GTX, and GTX+ -- price range of Rs 13.79 lakh to Rs 17.34 lakh
(ex-showroom pan-India).
Seltos Engine comes
with 3 BS VI engine options -Petrol 1.5L, turbocharged petrol 1.4L, and diesel 1.5L.
The turbocharged petrol 1.4-litre engine is only offered with the GT Line
variants with the Manual and Automatic transmission. Seltos has a mileage of
16.1 to 20.8 kmpl based on fuel type and the variants. The 5-seater SUV Seltos measures
of 4315mmin length, 1800mm width and a 2610mm of wheelbase.
Kia has offered a
bunch of features in the Seltos as Kia’s UVO connected car technology
infotainment system of 10.25-inch touch screen, ambient lighting with head-up
display of 8-inch and smart air purifier. The select variants offers a
multi-information display of 7-inch, Bose sound system with eight-speakers, ventilated
front seats, a power-adjustable driver seat, a sunroof and leatherette interiors.
Safety features includes 6 airbags,
ABS with EBD as well as electronic stability control. It has 360° parking camera with blind-view and rear-view monitor are
also offered along with parking sensors in front and rear.
Seltos compete with
the Nissan Kicks,Maruti Suzuki S-Cross, Hyundai Creta and Renault Captur. It based on its pricing competes MG Hector and Tata Harrier. It will also take on the upcoming Skoda VISION IN SUV. (Exhibit-4)
Kia Carnival
Carnival is the Multi-Purpose Vehicle (MPV)
available in 3 variants: Prestige, Premium and Limousine, with the option of seven,
eight or nine seats. All three variants are available with the 2.2-litre diesel
engine. The limousine variant is a 7-seater version with luxurious armchairs
for the middle row. The Prestige variant is available as a 7- or 9-seater. The
entry-level Premium trim is available as a 7- or 8-seater. Three colour options
offered are Glacier White Pearl, Steel Silver, Aurora Black Pearl. However,
some of these colours are available in specific versions. In contrast to the
Innova Crysta, the Carnival is a car with front-wheel drive with claimant
mileage of 13.9kmpl and 540 litres of boot space.
Carnival has exclusive features as Android
Auto and Apple CarPlay, wireless phone charger, rear electric sliding doors,
rear entertainment screens as well as tri-zone climate control. Safety features
on offer are 6 Airbags, Anti-locking Braking System (ABS) with Electronic
Brakeforce Distribution (EBD), front and rear parking sensors, a rear-view
camera as well as electronic stability control. The top-spec variants also get
UVO connected car (free for 3 years), Featured with sound system of premium
8-speaker from Harman/Kardon and dual touch screen of 10.1",ventilation
for driver seat, entertainment system at rear seat, ten-way power driver seat,
wireless charger and smartwatch connectivity.(Exhibit-5)
Kia Carnival Rivals
against Ford Endeavour, Mahindra Alturas G4, Toyota Innova Crysta, Isuzu MU-X,
Honda CR-V and Mitsubishi Pajero Sport.
Price
Kia Motors in its origin
country South Korea applied a competitive pricing strategy. However, at the
global front in US, some regions of UK and Africa and for export products it kept
price high. In-spite of having strong brand value in different regions of the
world is not offering very competitive discounts as compare to other
competitors as Nissan. With ambitious expansion and upscaling of its flagships
and other brands the company is aiming to raise up the price range. Still But
in comparison to the conventional brand range is not competitive. Further to avoid
the brand segments overlapping of its products it also maintains price gaps
among its product ranges. (Exhibit 6)
Kia Motors estimated approx. forty-four billion dollars annual revenues. After a thorough market analysis, it set up the effective pricing strategy which focuses to target right market considering the customer willingness and power to purchase.
Kia Motors India understanding the tough competition of competitor firms, attempted to walkout a right balance among its company, customers and prices. It embraced a competitive pricing strategy which offers product prices marginally same to its competitor’s company products. Kia Motors with the basic thumb rule that greater the volume, greater the profits has put focus more on sales numbers than on profits.
Kia's debut model in India, the Seltos is also the segment leader
at present. The Kia Seltos is a 5-seater midsize SUV that is priced from Rs
9.89 lakh to Rs 17.29 lakh (ex-showroom). Kia Carnival price starts
at ₹ 24.95 Lakh and goes upto ₹ 33.95 Lakh. The price of Diesel variant for
Carnival ranges between ₹ 24.95 Lakh - ₹ 33.95 Lakh. (Exhibit -5)
Place
Kia Motors serves across the globe with its Seoul headquarters in South Korea. The firm has fourteen plants of manufacturing and designing located at various regions of South Korea, United States, Vietnam, Mexico, China and Slovakia. Sales and Distribution are taken care by American unit of Kia Motors.
Kia offers service and selling facilities of its products through widespread distribution channel network of service dealers and distributors expanded over more than 170 countries across the globe with about 4000 dealers. This strong network helped in achieving more than three million-unit sales. The company has 342 sales offices headed by headquarters located in twenty different regions. Kia Motor vehicles orders can be easily placed through dealers’ outlets or online portals of automobiles.
Kia India, along
with its debut of Seltos entered with a very aggressive network strategy of its
presence in 160 cities and 265 touch points. This number is far more than what
most companies which have been existing in Indian market for over a decade.
Promotion
Kia
Motors in its promotional mix strategy focus strongly on advertisement element
of mix. Recently through its alliance with several main sports as Australian
Open, Basketball events NBA, Women’s NBA, the FIFA and UEFA cup, it gains
across the globe brand awareness. Kia Motors opted various communication media like
hoardings, Television, print media, online advertisements, etc for promotion. It
collaborated with certain sports teams and athletes to enhance brand awareness.
Kia Motors gains faith of customers and brand reputation through showcasing
quality, design, safety features of motor and celebrity’s endorsement. It run
online campaigns as ‘Share #Kia’ as a promotional tool on various online
platforms. Kia globally showcased society and environmental concern with an
active participant of several CSR activities like donating products for the
handicapped and supporting college goers.
Kia India probably by now with lots of curiosity has reached their target audience. The Sales and Marketing team with market specific storytelling and through various Online, Offline & TV promotions may outreached its customers.
As Indian consumers accelerates the level of familiarity with Bollywood so Kia connect with consumers through campaign having Tiger Shroff, a youth icon. India with more mobile user customers it adopted a digital-first approach. The idea was to generate a sense of awareness before introducing the brand. It intensely utilized online and social media platforms as Facebook, Instagram and YouTube. Its understanding of Indians as lover of video watcher, opted the video strategy as promotion tool.The results of these promotional strategies were amazing reflected by more than six thousand first day bookings since pre-bookings begins.
Conclusion
In the year 2019, Kia Motors identified
their rhythm for niche segment of the global market and plans to enter the
Indian market. Hyundai owns 33.88% share of Kia Motors15.The company
managed to enter in a competitive market such as the UK and was successful.
The credit for their success can be mainly owe to the huge network of dealers
the company has established. Hyundai Kia scattered over 165 countries has
12 assembly line manufacturing plants. It is the fourth largest car OEM (Original
Equipment Manufacturer) in the world covering over 166 dealerships. Every
company for building its brand identity has a unique selling point (USP). Kia
Motors Corp. used their competitive pricing as USP in comparison to the other
players in the market. However, with passing years, it has intended to
change this image of their brand to great quality and design. This was done initially
through sports sponsorship deals. In FIFA 2002 Kia was the sponsor and official
FIFA partner.
Till the year 2022 it has gained sponsorship deals. Such revolutionary thinking
backed with sports sponsorship has helped to amend their brand image just known
for competitive pricing to great quality and design. Further Kia has also obtained
cricket and tennis sponsorship deals.
Kia further promoted and enhanced its
brand image of great quality and design through seven-year warranty on its
products. Their marketing strategy advanced adopting AIDA concept. Beginning
from developing awareness in their customers to captivating their attention,
then stimulating their desire and finally, call in for action. In this manner
it influenced customers’ buying preferences. At the same phase Kia’s promotion
strategies outstrip all mediocre attempts. It not only grabs their customers
attention through mass media tools as advertising, online blogging, banners,
etc. but also took various measures as direct customer contact, sales
promotions and sponsorships as its below-the-line promotion strategies. Further, to strengthen relations with customers via online channel
Kia motors developed an online portal. Kia Motors also look forward for CSR
initiatives and create awareness about various environmental issues. It has
partnership with Trees in Cities, intending to encourage people desire for
planting trees. Hence to stay ahead of the curve such extra measures are essential
for a company.
KIA
motors India is now testing the Indian waters and about to stride in knee deep with
its own unique style. Theoretically it seems that its previous experience supported
with expertise, may hold in the Indian market if the company closely continue
with its values and ideals. It is interesting to analyse the entry of the
company in Indian soil as a success or failure in the coming year.
References
1.
https://www.ibef.org/industry/india-automobiles.aspx
3.
https://www.ibef.org/industry/india-automobiles/infographic
4.
https://www.ibef.org/industry/india-automobiles.aspx
5.
https://kiacarsindia.wordpress.com/behind-the-names-of-kia/
6.
https://www.kia.com/mt/about-kia/kia-company/
7.
https://kiacarsindia.wordpress.com/brief-about-kia-motors-india/
8.
http://joviho.com/kia-seltos-why-kia-will-be-successful-in-india-kia-case-study/
9.
https://www.marketing91.com/marketing-mix-kia-motors/
10.
https://auto.ndtv.com/kia-cars
11. https://www.cardekho.com/upcoming-kia-cars.htm
12.
https://www.zigwheels.com/newcars/Kia/seltos/specifications
13.
https://www.zigwheels.com/newcars/Kia/carnival/specifications
15.
https://www.brandkoncept.com/insights/mg-motor-and-kia-india-entry-strategy.html
Exhibit - 1
Automobiles Infographics3
Exhibit
-2
Exhibit – 3
Exhibit
-4 |
Seltos
Variants |
Key
Specifications |
Key
Features |
|
HTE G |
16 Kmpl, 1497
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking |
|
HTK G |
16 Kmpl, 1497
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
HTE D |
20 Kmpl, 1493
cc, Manual, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking |
|
HTK Plus G |
16 Kmpl, 1497
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking |
|
HTK D |
20 Kmpl, 1493
cc, Manual, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
HTK Plus D |
20 Kmpl, 1493
cc, Manual, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
HTX G |
16 Kmpl, 1497
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
HTK Plus AT D |
17 Kmpl, 1493
cc, Automatic, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
GTK |
16 Kmpl, 1353
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
HTX IVT G |
16 Kmpl, 1497
cc, Automatic, Petrol |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking |
|
HTX D |
20 Kmpl, 1493
cc, Manual, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
GTX |
16 Kmpl, 1353
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver, Passenger and Side Front Airbags, ABS, Yes ABS,
Central Locking, Yes Central Locking, Front Fog Lamps |
|
HTX Plus D |
20 Kmpl, 1493
cc, Manual, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
GTX Plus |
16 Kmpl, 1353
cc, Manual, Petrol |
Front and Rear
Power Windows, Driver, Passenger and Side Front Airbags, ABS, Yes ABS,
Central Locking, Yes Central Locking, Front Fog Lamps |
|
GTX DCT |
16 Kmpl, 1353
cc, Automatic, Petrol |
Front and Rear
Power Windows, Driver, Passenger and Side Front Airbags, ABS, Yes ABS,
Central Locking, Yes Central Locking, Front Fog Lamps |
|
HTX Plus AT D |
17 Kmpl, 1493
cc, Automatic, Diesel |
Front and Rear
Power Windows, Driver and Passenger Airbags, ABS, Yes ABS, Central Locking,
Yes Central Locking, Front Fog Lamps |
|
GTX Plus DCT |
16 Kmpl, 1353
cc, Automatic, Petrol |
Front and Rear
Power Windows, Driver, Passenger and Side Front Airbags, ABS, Yes ABS,
Central Locking, Yes Central Locking, Front Fog Lamps |
|
GTX Plus AT D |
17 Kmpl, 1493
cc, Automatic, Diesel |
Front and Rear
Power Windows, Driver, Passenger and Side Front Airbags, ABS, Yes ABS,
Central Locking, Yes Central Locking, Front Fog Lamps |
|
Carnival Variants |
Key Specifications |
Key Features |
|
Premium |
2199 cc, 197.2bhp @3800rpm |
Sunroof, Adj. Front Passenger Seat, Yes Adj. Front
Passenger Seat, Heated/Cooled Seats |
|
Premium 8 STR |
2199 cc, 197.2bhp @3800rpm |
Sunroof, Adj. Front Passenger Seat, Yes Adj. Front
Passenger Seat, Heated/Cooled Seats |
|
Prestige |
2199 cc, 197.2bhp @3800rpm |
Sunroof, Adj. Front Passenger Seat, Yes Adj. Front
Passenger Seat, Heated/Cooled Seats |
|
Prestige 9 STR |
2199 cc, 197.2bhp @3800rpm |
Sunroof, Adj. Front Passenger Seat, Yes Adj. Front
Passenger Seat, Heated/Cooled Seats |
|
Limousine |
2199 cc, 197.2bhp @3800rpm |
Sunroof, Adjustable Driver Seat, Yes Adjustable
Driver Seat, Adj. Front Passenger Seat, Yes Adj. Front Passenger Seat,
Heated/Cooled Seats |
Exhibit - 6
|
MODEL |
PRICE *Expected
Price |
|
Kia
Stonic |
Rs. 9.0 Lakh* |
|
Kia
Sonet |
Rs. 7.0 Lakh* |
|
Kia
Soul |
Rs. 10.0 Lakh* |
|
Kia
Ceed |
Rs. 9.0 Lakh* |
|
Kia
Stinger |
Rs. 50.0 Lakh* |
|
Kia
Sportage |
Rs. 25.0 Lakh* |
|
Kia
Rio |
Rs. 8.0 Lakh* |
|
Kia
Xceed |
Rs. 20.0 Lakh* |
|
Kia
Picanto |
Rs. 7.0 Lakh* |
