Worldwide demand for new Kia forces diesel pricing change

Overwhelming demand for the new Kia Rio diesel has forced Kia Motors (UK) Ltd, to revise its sales forecasts for 2006 and change its original plan to offer diesel at the same price as petrol.

Since the launch of the new Rio, demand in the UK has been running ahead of expectations – the company expected to sell 2,500 units this year – and globally the new car has been the focus of amazing demand. With worldwide demand running far ahead of global production levels, all markets will receive less than half of the planned original volume.

That means Kia’s plan to sell 15,000 units in the UK in 2006 has been cut to 6,000 units and that has forced the company to abandon its plan to sell diesel and petrol-engined versions at the same price.

Paul Williams, Managing Director said: “When we unveiled Rio in the UK we said we were going to continue our fight against the diesel paradox of charging more for diesel than petrol – a campaign we started with Cerato and that model attracts a diesel premium of just £700, significantly less than its competitors in the C-segment.

“We unveiled Rio petrol and diesel at exactly the same price, but that position was based on sales volumes in 2005 and 2006 of 17,500 units with sales split roughly 60-40 in favour of diesel.

“So far in 2005 we have only been able to supply 1,500 Rios because of production constraints caused by global demand and next year we will only get 6,000 units in total. That means the economics of our pricing strategy simply do not stand up and I am afraid that means we will not be able to hold the diesel price alongside the petrol price,” he added.

The result is an increase in all Rio pricing: with petrol-engined versions rising to £8,495 for the 1.4 GS and £9,495 for the LX and diesel-engined versions rising to £8,995 for the 1.5 GS and £9,995 for the LX.

The new prices mean that diesel-engined versions of Rio will cost £500 more than their petrol equivalents – still considerably lower than the premium carried by any of Rio’s main rivals.

And Kia’s strong value proposition remains intact with the Rio 1.4 GS still undercutting rivals such as Ford’s Fiesta 1.4 Style by £1,400 and Vauxhall’s Corsa 1.4 SXI by £2,900. The Rio CRDi 1.5 GS costs £850 less than the Peugeot 206 1.4 HDI 70 Urban, and £2,060 less than the Vauxhall Corsa 1.3 CDTI Life.