As Compact SUV Demand Rises, So Does the Competition

Despite contracting Sports Utility Vehicle (SUV) sales due to higher oil prices, sales of smaller SUVs are booming. Consumers are turning their attention to 5-seater, small SUVs, which cost drivers less in maintenance expenses.

Mid- and large-sized seven-seater SUVs have the advantages of spacious interiors and strong power that can be valuable on unpaved roads. Yet, these advantages have been overshadowed by high oil prices and high maintenance costs.

What’s worse, the tax credits for seven-seater vehicles have been scrapped starting this year.

According to the Korea Automobile Manufacturers Association (KAMA), the number of SUVs sold for the year to September stood at 159,669 units, down about 20 percent from the year-earlier period.

Fierce competition between Sportage and Tucson-

On the other hand, five-seater smaller SUVs, including the Sportage and the Tucson, which have relatively lower management costs, are enjoying sustained popularity.

The share of smaller SUVs in the overall SUV market soared to 45.2 percent this year from 22.8 percent last year. The number of combined sales of Sportages and Tucsons between January and September was 72,161 units, up 52 percent from a year earlier.

Sportage from Kia Motors and Tucson from Hyundai Motors are both five-seater SUVs and use the same chassis and engine, but their designs and marketing strategies are different.

While the Sportage is targeted toward the young generation by highlighting its chic colors such as “Hawaiian blue”; “romantic rose”; or “coffee bean,” the Tucson emphasizes its urban ambience with a “style pack” of calm, one-tone colors.

In terms of sales in the first half of this year, Sportage won an overwhelming victory. The sales of Sportage recorded 37,224 units for the year to July, far exceeding that of the Tucson, which sold 21,568 units.

Yet, 4,011 and 3,355 Tucsons were sold in August and September, respectively, overtaking the Sportage, which sold 3,452 units in August and 2,551 units in September.

In response to the figures, the Kia Motor Corp. said “the sluggish sales in August and September can be attributed to labor strikes.”

Three SUV models are vying for the smaller SUVs market-

On October 13, Ssangyong Motor’s new SUV, the Actyon, will hit the market.

The motor company recently took an unprecedented step by unveiling some of the latest model’s performance ahead of its official release, boasting the Actyon has largest engine capacity than any other vehicles in the same class.

Sportage and Tucson have 115 horsepower engine, while the Actyon features a 145 horsepower engine. The company explained the pilot injection system has helped improve noise and vibration.

Ssangyong Motor is promoting the Actyon through commercials that feature actor Park Hae-il and actress Jeong Ryeo-won.

This marketing strategy is a far cry from the past when the company was even reluctant to unveil pictures of its new models ahead of the official release of its Kyron vehicle.

Ssangyong Motor said its previous marketing strategy for Kyron, aimed at provoking curiosity, was considered ineffective, so its marketing direction has changed to an aggressive promotion.

Some in the automobile industry analyzed that why the sales of Sportage and Tucson fell from 7,463 units in August to 5,906 units in September can be explained by pent-up demand for Actyon, so the sales war in the small SUV market is expected to become more intense starting later this month.

Sung-Won Joo swon@donga.com