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Kia cuts UK Rio supplies

Kia dealers have been told they will be supplied with only 6,000 Rios this year, and not the 15,000 they believed they could have sold.

Last year, Rio registrations were expected to total 2,500 but fell around 1,000 short because of restricted supplies.

The manufacturer blames high global demand for the volume reductions in markets including the UK and the rest of Europe. The shortage blunts Kia Motors UK’s sales growth plan and its 2006 prediction is 45,000 to 46,000 registrations compared with the 55,000 originally projected. Kia UK’s 2010 target of 100,000 stands.

All Rios are built at the Soharis plant in South Korea. It appears that Kia is giving priority to the four-door Rio, seen as a prestige model in its domestic market, but not sold in the UK. The value of the Korean won has fallen below 1,000 to the US dollar, making exports more expensive.

Kia’s need to satisfy its home market is putting pressure on supply of the hatchback which, say Kia dealers, is in growing demand in the UK.

Soharis can build a maximum of 300,000 Rios a year on two eight-hour shifts, each with two hours of overtime added. This leaves no scope for a third shift.

The supply cutback has caused Kia Motors UK to drop a key marketing strategy. It wanted to sell diesel Rios for the same price as petrol equivalents, but has now been forced into a second price increase (of £500 on diesel derivatives), taking the average rise across the range to 4.5%.

Paul Williams, Kia Motors UK managing director, says: “As we are getting only 6,000 Rios this year, the economics of our pricing strategy simply do not stand up. I am afraid that means we will not be able to hold the diesel price alongside the petrol price.”

Kia UK is going ahead with this month’s marketing programme on Rio, but had to make a late change to a TV commercial because of the new diesel pricing.

Nigel Clegg, managing director of Livery Dole Kia, Exeter, says: “Naturally, we are disappointed, because the network could have sold 15,000 Rios but Kia UK has been sensible and lowered our targets for the year.”

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