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Kia Aims To Beat Down Trend In Europe

Can Koreans Really Prosper While Others Flounder?

While European mass car makers batten down the hatches and prepare for an uphill struggle in 2012, Kia of Korea expects E.U. sales to zoom 23 per cent higher.

In 2011, Kia sales rose in Europe by 11.8 per cent to 294,000, according to ACEA. This year Kia aims to sell 356,000 cars.

The Financial Times Lex column suggests that after years of steady success, this time maybe Kia has bitten off more than it can chew.

“Kia produced a 10 per cent sales increase (in 2011) even as the overall market fell nearly two per cent last year and it managed a net margin of between one and two per cent, Nomura estimates, after years of losses. But that growth will be hard to match, let along better, as economic gloom worsens,” Lex said.

Deutsche Bank though has some reasons why Kia will continue to advance, not least on the profit front.

·      Kia has no issues with capacity and, if needed can produce 1.7 million units from its Korean plants and 2.86 million globally compared with its target of 2.71 million in 2012.

·      Sales from integrated platforms will rise to 70 per cent of the total in 2012 compared with 50 per cent in 2011, implying improvement in gross profit and operating margin is sustainable.

·      In 2012, Kia will have four models selling more than 300,000 versus only two in 2011.

Kia plans to unveil the face-lifted Cee’d at the Geneva show early next month.

Neil Winton – February 20, 2012

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