Kia faces upmarket test in China with K9 sedan launch

By REUTERS | 21 April 2015


SEOUL: Kia Motors Corp released its K9 premium sedan in China on Monday, kicking off its journey upmarket with a model whose sales have been paltry both in the United States and at home in South Korea.

Kia and sister Hyundai Motor Co are banking on the world's biggest auto market to boost sales of high-end cars, which garner fatter profit margins and can raise the profile of models up and down the brand.

But Kia - China's third-ranked passenger car maker when paired with Hyundai - is introducing its K9 during a period of sluggish growth in the local auto market, in an economy heading for its slowest rate of expansion in a quarter of a century.

Compounding matters, Kia does not produce any premium cars in its neighbouring country, rendering high-end imports such as the K9 subject to import duty of over 20 percent.

"A strong preference for German cars in China will make it even more difficult for Kia to penetrate the premium segment there," said analyst Chae Hee-guen at Hyundai Securities.

Kia's K9 was designed under the direction of former Audi AG  executive Peter Schreyer, and unveiled in China at the Shanghai autoshow on Monday. Prices will range from 558,000 yuan to 698,000 yuan (US$89,958 to US$112,528).

Kia released the K9 in South Korea in 2012 with a monthly sales goal of 2,000 cars. It sold only 4,429 for all of 2014, 12 percent less than in 2013, while in the United States - where it was sold as the K900 - sales reached just 1,330.

Sales may not be high, but entry-level premium models such as the K9 are "essential" for automakers such as Kia to win over current customers looking to upgrade, said Shanghai-based James Chao, Asia-Pacific managing director at IHS Automotive.

"Hyundai-Kia are positioned lower from the brand perspective than German counterparts like Volkswagen AG... but higher than local Chinese brands," said Chao. "That makes this vehicle even more important as an image- or brand-building strategy."

While the K9 is Kia's first premium sedan for China, sister Hyundai is already present in the segment. Last year, Hyundai's high-end car exports to China totalled 1,160 Genesis and just 63 Equus, showed industry data obtained by Reuters.

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