Can KIA be King, or do the Big 3 have another trick up their sleeve?

Let us preface this article by saying that the KIA Sportage, in our very humble opinion, is one ugly car. Of course, the aesthetics of car design is not exactly business or financial analysis, and thus not the forte of Profit, but on a personal level we, the authors of this piece, must profess that it looks very much like an oversized soap dish. It is also trying just a little too hard to look both like a sport utility vehicle (like the Land Cruiser) and your average soccer-mom SUV at the same time. 

Why do we say all of these horrendous things about the KIA Sportage? Mostly because we want to get this part out of the way, since the rest of this article will paint a very pretty picture of the position that the Sportage has put KIA in. Manufactured by KIA Lucky Motors, a joint venture between KIA and Pakistan’s cement producing Lucky Group, the new entrant in Pakistan’s automobile sector has managed to sell more than 25,000 KIA Sportages between August 2019 and August 2021. That means on average KIA Lucky Motors has managed to sell more than 1000 Sportages every month since the pandemic. 

And now, with car sales continuing to skyrocket in Pakistan, it is very much in the realm of possibility that in the financial year 2022, the KIA Sportage will outsell the Toyota Corolla. Now, there are a few reasons for this -  most significantly that Toyota has stopped making 1300cc versions of the Toyota Corolla and are instead making the more affordable Toyota Yaris - which is why we must say from the outset that KIA is nowhere close to outselling Toyota overall. Toyota has sold 38,514 Corolla units in around the same time frame. The Toyota Yaris, on the other hand, has only been around for 14 months, and in that time has sold 29,266 - making it the fastest growing car around. Honda, in the meantime, seems to have taken a bigger hit from the KIA revolution with a total of 37,915 Honda models, both City and Civic, being sold in the same 24 month period from 2019-2021. 

Yes, car sales have grown overall in Pakistan as well, but that has been driven not just by the ability to buy cars but the choices available. It also means that the Big Three failed to tap into a massive market - cheap SUVs. Because at the end of the day, that is what the KIA Sportage has brought to the market. You can now buy an SUV for the same price as a sedan. 

What is undeniable is that KIA’s successful entry into Pakistan’s auto sector has not just taken away a significant chunk of the market from mainstay players like Toyota, Suzuki and Honda, but it has also caused these three companies (collectively known in Pakistan’s automobile industry as the ‘Big Three’) to change strategies that they have been using for decades to tactfully maintain the triopoly.

Somehow, because of the Big Three, the choices for cars in Pakistan have remained very limited. With a population of nearly 220 million people, and more than 23 million cars out on the roads in the country, surprisingly Pakistan does not manufacture any cars locally and for decades consumers have been restricted from choosing between Honda, Toyota, and Suzuki.  

But the success of KIA is challenging this status quo, and their success also means that other car manufacturers making their entry into the Pakistani market are not just being emboldened, but they are also finding it easier to convince customers that there are viable alternatives to the Big Three. Already Hyundai has seen a surge in popularity, the Chinese Changan has made a name for itself with its budget sedan Alsvin, and even Lucky Motors is now planning to sign a similar joint venture with French automobile manufacturer Peugeot.  And while these are all early in-roads, could KIA and the other challengers to the Big Three change Pakistan’s automobile industry forever? Yes. Very much so. And the change has been long, long, overdue. 

Cars in Pakistan - a brief history  

Our story begins in the early 1990s. Up until then, cars were mostly only for the uber elite, and the auto industry in Pakistan had flip flopped between privatisation and nationalisation.