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Australian cars are not too cheap

By Glenn Butler, 09 Jul 2014 News

Australian cars are not too cheap

New Kia boss hits out at claims by Holden that new vehicles are too cheap in Australia, and that prices will rise

KIA Australia's new boss has struck out at Holden's claim that new cars are too cheap in Australia.

Speaking to the media for the first time as COO of the Korean car maker's Australian operation, Damien Meredith said the remarks made by Holden CEO Gerry Dorizas smack of someone "who doesn't understand the nuances of what Australians are about".

In April this year, Holden's then new managing director Gerry Dorizas said new cars are too cheap, and that he expected prices to rise in the near future. 

“It is incredible to see the prices of cars here in Australia are less than the prices in Europe, with the cost of living being more expensive, if not double, that of Germany,” Dorizas had said.

“That is not sustainable … I believe [prices] will go up at some particular time … how profitable are the dealers today with these sales? At some particular point this competition of prices will create a problem in the network… I’m talking about the total market. The whole situation will change.”

When asked whether he agreed with Dorizas' remarks, Kia's new boss was clear. 

"Well, I don't think cars are too cheap in Australia,” said Mr Meredith. “23 million people and we sell 1.1-1.2 million cars a year. I think we're pretty high up in the ratio of population to cars. [So] I don't think that at all.

“We are an open economy, and with that comes competition. In America there are 53 [brands] and in Australia there are 64. So competition is the main driver in regards to prices, not the cost per unit. That to me is arbitrary. 

“I think it's an argument by someone who hasn't grown up in [this] country, and who doesn't understand the nuances of what Australians are about.

"So, to answer your question: No. Cars aren't too cheap."

Meredith believes that Kia, Australia's 11th most popular brand, has the potential to almost double its sales in the next three years and move up the leaderboard.

"Certainly I think 51,000 sales is achievable," he told Wheels

In 2013 Kia sold 29,778 new vehicles, 980 down on the year before. Kia's best seller is the Rio light car, followed by the Sportage SUV and then the Cerato small car. 

Meredith believes there is considerable upside in the current portfolio, primarily by pursuing a marketing strategy around tuning imported Kia models for Australian conditions. 

"It's important, the Australian set-up of our cars. I don't think we've actually told that story to the Australian consumer yet. I don't think the consumer understands that at this time. We've got to take that to another level to communicate that to potential buyers."

Kia is not the first import brand to employ independent Australian engineers to tune the ride and handling of its vehicles for Australian roads.

Meredith strongly believes that localisation, as it's called, will result in sales success.

"My research tells me that, yes. It's my view that that aspect will translate into growth for Kia going forward."

Earlier this year, Kia launched the Proceed GT, which was tuned for local conditions.

Next up later this year is the updated Rio, which will also be localised.