The rise and rise of Chinese brands like MG and GWM in Australia have Kia’s local boss, Damien Meredith, feeling jumpy – but he’s happy for them, as long as they stay cheap and cheerful.
You only need to look at the sales results for 2021 to see that even in a year plagued by COVID and long delivery delays due to the semiconductor shortage, MG and GWM had a bumper year.
In 2021, MG rode to success on the back of the little MG3 hatch, along with the HS and ZS SUVs, selling 39,025 vehicles in 2021. To put that in perspective, Volkswagen sold 40,770 over the same time period, while Subaru managed 37,015 sales.
That was enough to put MG into ninth place ahead of Subaru in the Top 10 car brands of 2021 – the first time a Chinese brand had broken into this golden group.
MG may have a British heritage and be headquartered in London, but the brand is now owned by Chinese company SAIC Motor and the vehicles are also made in China. So, the brand is well and truly Chinese, even if it leverages its ‘Britishness’ in the same way the BMW-owned Mini brand also does.
GWM (Great Wall Motors) is also Chinese-owned and makes the popular Haval Jolion and Haval H6 SUVs. It recorded 18,384 sales in 2021, finishing ahead of Honda with 17,562 vehicles sold.
Mr Meredith is impressed by the success of Chinese brands in Australia and sees them filling the ‘cheap and cheerful’ space in the market Kia has left as it becomes a more premium player.
“Firstly, I think they’ve done a wonderful job. Secondly, we always knew that if we pushed up, that they would take the void left by us – specifically MG. But if we didn’t focus on our brand like we have over probably the last four to five years, we’d still be cheap and cheerful, and that’s not what we want to do with where we are going in regard to our product and where we’re going with electrification,” he said.
When Kia arrived in Australia in the late 1990s, the Korean brand won over Aussies with its affordable alternatives to more expensive and established Japanese models.
The mid-2000s saw Audi’s Peter Schreyer join Kia as its global design boss and the appointment saw a dramatic change in the styling of its models to a more premium look and feel.
Kia has followed that high-end styling trajectory ever since and models such as the new Sorento, Carnival and the upcoming EV6 electric vehicle have seen it become not just a major rival to Mazda and Toyota, but a challenger to Volkswagen as well.
Still, the decision to move away from being just the budget brand comes with its risks, Mr Meredith conceded.
“We had to make that decision,” he said.
“I mean, we discuss it internally all the time that our underbelly is exposed because of what we’ve done, but you’ve got to have belief in the strategy that you’ve put in place, in regard to brand improvement and brand resilience, and we think we’re doing OK.”
That said, Mr Meredith is keeping a keen eye on MG’s increasing market share. On a good month in 2021, Kia was selling about 7000 vehicles, but typically it sold between 5000 and 6000. MG hovered at just above 3000 a month for 2021, even hitting 4303 sales in June last year. Those are very good results for any car manufacturer and enough to spook him.
“I do get a little bit jumpy when I see they’re doing 3000-3500. But look, they’ve done a good job, and you’ve got to be respectful of that,” Mr Meredith.
He added it’s time for carmakers that are already established in Australia to recognise MG and other Chinese brands as genuine rivals.
“I think the industry has to understand that they’re competitors – that’s certainly how we look at them,” Mr Meredith said.
The biggest-selling MG in 2021 was the ZS SUV, with 18,423 sales for the year. The ZS was the best-selling small SUV under $40K for 2021, beating Mitsubishi’s ever-popular ASX with 14,764 sales, the Mazda CX-30 which did 13,309, and Hyundai Kona on 12,748. Kia’s Seltos was way behind on 8834 sales for 2021.
Keyword: Kia 'a little bit jumpy': Korean giant reacts to the rapid rise of MG, Great Wall Motors and other Chinese car brands in Australia