Australia’s cheapest new car is safe in showrooms for now, with a second facelift due later this year – and a starting price set to remain below $20,000.
The Kia Picanto city hatch – Australia’s cheapest new car – is due to receive another facelift within the next 12 months, granting it a lifeline until close to the middle of the decade.
The current Kia Picanto launched in 2017 and received its scheduled mid-life facelift in 2020 – meaning it is due for an all-new generation in 2023, based on the six-year life cycles for Kia passenger cars.
But it is instead slated to receive another facelift, due in Australian showrooms in the second half of 2023 – pending any further delays.
As rival city cars increase in price with new technology or stiffer safety structures, Kia has committed to keeping the Picanto’s base prices under $20,000 for “as long as possible”.
Kia’s decision not to invest in a new model – for the time being – comes as sales of city cars decline globally, and strict emissions regulations in its main market, Europe, due in 2025 threaten the future of affordable, petrol-powered compact hatchbacks.
The South Korean factory that produces the Kia Picanto for Australia built approximately 120,000 examples over the first 10 months of 2022 – down from 165,000 and 177,000 over the same periods in 2019 and 2017 respectively.
It is unclear if a new Kia Picanto is in development to follow this year’s second facelift – and if it would be powered by petrol or electricity.
However, this year’s facelift means a new model is not due until 2026 – at which point it could adopt electric power, as car makers say new 2025 emissions regulations in Europe are said to make petrol city cars at affordable prices unfeasible.
Kia Australia has committed to retaining passenger cars in its showrooms, despite the booming popularity of its SUVs.
“We’re pleased that the Picanto, Rio, and Cerato are still going as strong as they’re going,” Kia Australia chief operating officer Damien Meredith told Drive.
“Whilst all of us are talking about and excited about [electric vehicles], there’s still a segment of people that are buying small passenger cars with petrol engines, and that’s a fact of life in Australia, so we think that that’ll continue on for a while.
“From a long-term plan point of view, some of those cars are in that long-term plan, so there’s still a pulse with small passenger cars,” said Mr Meredith.
Drive’s question to Mr Meredith referenced the Picanto, Rio and Cerato – so his comments suggest one of these three cars could be discontinued.
It is understood a new Kia Cerato – a Toyota Corolla-sized hatch and sedan – is in development, however the future of the Kia Rio beyond the current model given it is not sold in as many global markets.
In the meantime, Mr Meredith said Kia Australia intends to retain budget-priced cars below $20,000 “for as long as possible.”
However, the executive conceded in time it will no longer be possible to sell a $20,000 new car – amid rising inflation and manufacturing costs, stricter safety standards, and the cost of new technology.
“With variables outside our control (such as) global inflation, the cost of manufacturing, supply et cetera, it’s getting harder and harder for not just us, but every manufacturer, to have vehicles under that $20,000 mark,” Mr Meredith told Drive.
“We’ve built our strength on that. We took a strategy a few years ago, where we didn’t exit passenger cars, and it paid huge dividends for us, and I think that that’ll continue for a while.
“We obviously look at the market very closely, and small passenger [cars] are dropping off quicker than we thought. What we thought would be an 8 per cent decline year on year, [has] been going into double figure declines over the last two years.
“That’s … a lot to do with supply, but there’s still an appetite for those cars. So we’ll juggle the brand to hopefully be able to supply both the new exciting [electric vehicle] models, and the old, but required, passenger vehicles in Australia.”
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