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Kia Motors, a unit of South Korea's biggest car maker Hyundai Motor, plans to introduce a slew of new models for its joint venture in China, a move that could more than triple the sales in China, the world's No 3 auto market, within the next five years.
New models at the venture, with China's Dongfeng Motor and industrial group Yueda, will include a sport utility vehicle (SUV), a luxury sedan and others, which are to replace the existing Optima middle-range sedan and Carnival wagon, said Lee Hyoung-keun, president of the venture.
The venture in East China's Jiangsu Province aims to sell 400,000 cars annually by 2010, up from 130,000 units expected this year, Lee said.
Kia's move is part of Hyundai's ambitious target of selling one million cars in China and controlling two-fifths of the nation's increasingly competitive car market by 2010.
Hyundai now runs a joint car venture with Beijing Automotive Industry Holdings Corp, which plans to sell 600,000 cars a year by 2010.
Last Thursday, Kia's venture launched a 1.6-to-1.8-litre Cerato retailing between 107,800 yuan (US$13,300) and 153,800 yuan (US$19,000).
Lee said the venture expects to sell 30,000 Ceratos this year.
"We aim to cover all types of passenger vehicles by introducing new models and to become a major player in China's auto market," Lee said.
The venture is also making Qianlima compact sedans.
The venture, which now has an annual production capacity of 130,000 units, will start to build a new 300,000-unit plant this year with a total investment of US$790 million, he said.
However, analysts warned of internal battles between Kia and Hyundai in China due to the overlapping of product lines for both company's joint venture.
For example, Kia's Cerato goes head-to-head with the Elantra of Hyundai's venture in Beijing because the two models, developed on the same platform, have very similar prices.
"Kia and Hyundai could hardly prevent overlapping and contests between their products. Other global car makers, such as Volkswagen and PSA Peugeot Citroen, face the same problem," said Li Chunbo, an auto analyst with CITIC Securities Co.
Partly as a countermeasure against the Cerato as analysts believe, Beijing Hyundai cut the Elantra's price tag from the range of 112,800 to 151,800 yuan (US$13,900-18,700) down to 106,000 to 144,600 yuan (US$13,100-17,800), days before Kia's venture launched the Cerato.
Beijing Hyundai's Sonata and the Kia venture's Optima are also on the same platform.
However, Lee said Kia is building itself as a "young and exciting" brand in China while Hyundai is a "mature and established" brand. Moreover, Lee said the two have different customer bases.
He stressed that the Cerato was developed in late 2003, four years later than the Elantra.
The Cerato's main rivals in China are Nissan's Tiida, launched earlier this year, and Ford's Focus, which will be produced in China in September, instead of the Elantra, Lee said.
Beijing Hyundai, aiming to sell 250,000 vehicles in 2005, will launch a Sonata NF large-sized sedan at the end of this year.
(China Daily August 23, 2005)
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