Kia dispels first-mover advantage theory in Indian car market

Most have struggled, with the likes of GM and Ford even having beaten a hasty retreat back to their homes. Although the reasons for this may vary, the constant retort has been that the first-mover advantage is impossible to shake. First mover benefits are significant, but when companies understand what consumers want and give it to them, they can be knocked down. This was demonstrated by the Korean Kia player who landed in India just a few years ago.

Kia has passed the milestone of half a million cars in sales in just two years. It’s faster than VW, Ford, GM, Honda and Toyota. Its July sales are 47% higher than last year and topped the industry. Last year VW sold some 30,000 cars, Honda some 80,000 and Nissan around 37,000. Kia which arrived here at least 10 years later, if not more than all cars sold above at 2.2 lakh .

How did he do that? He paid attention to emerging fashionable trends, changing preferences, and did not underestimate the sensitivity of buyers.

Kia’s arrival was never hampered by management wasting time trying to explain who they were to the Indian customer. Instead, they got down to business, launching a car at the right price, aimed at the optimal segment of the market and positioned to compete against the best cars in the best-selling mobility segment. Their mid-range SUV called the Seltos was rolled out at a price between 11 lakh and 15 lakh and gained momentum when others slowed down or had no cars and local leaders missed opportunities.

The Seltos has already recorded sales of nearly 100,000 in just two years, which is more than some of its rivals are doing in full. Then Kia never rested on its laurels or got stuck on one product and waited a long time to bring more cars

After the Seltos, Kia quickly rolled out a mover called Carnival, a luxury seven-seater with all the bells and whistles and aimed squarely at the market leader, the Toyota Innova. Then, unpredictably, it came back down from the bottom up, rolling out another small SUV called the Sonet, loaded with tech, features and even luxuries like Bose speakers reserved for high-end cars several price points higher.

While the Seltos was successful, the Sonet pushed the pedal further and sold around 75,000 cars a year on average for the past two years. Amid growing consumer positivity for Kia, the company also announced an official change to its identity. Most companies reinforce their foreign origins and identity. Kia did the opposite. In May last year, Kia announced that its new corporate name would be Kia India. The message was clear: this was a business for India. It’s also important that automakers give voice when entering a market and not treat it as an afterthought or a dumping ground for obsolete or older products. Think Qualis, Pajero and Endeavour. But also when, say, Honda brings its new Civic to India, but with a decade-old engine. Companies don’t sell their latest cars here on the grounds that India is a price-sensitive market.

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Recently, Kia also introduced its EV6, a fast and super smooth SUV vehicle that is sold worldwide. Although expensive when sold here, it will serve as a halo or brand builder. This reinforces the operating philosophy that Kia had talked about at the launch here that it would bring the same cars to India as elsewhere.

Kia has abandoned the theory that only low-cost products work for an emerging market.

Kia has used the best car designers in the world to build its designs, which means that no matter what it costs, they all look great. Designers include Pete Schreyer who designed for Audi and VW; Pierre Leclercq who was a former designer at BMW; Karim Habib who designed cars for Infiniti and BMW; and Luc Donckerwolke, former VW Group designer for brands such as Bentley and Lamborghini.

Many car makers who came here started with small cars with the idea that India was a small car market. But Kia aimed for the growing sweet spot, namely SUVs and MPVSs, which are also higher on the margins. The bet worked and boosted the company’s performance here. Their strategy is clear. Go deep and compete on your own skills instead of taking on the first comers head-on. For an automaker to pull off all of this in such a short time without even launching small hatchbacks and compact sedans is a signal that the first mover advantage is only one when you’re not overwhelmed, because Kia’s peer group learns quickly.

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Sharon D. Cole