Kia Taking Another Look at Picanto

ATLANTA – As rivals prepare to launch A-segment vehicles in the U.S., Kia Motors America is reconsidering plans for its Picanto minicar, a company official tells Ward’s here.

KMA pondered the Picanto for the U.S. market last year when regular-grade gas prices smashed through the $4-per-gallon barrier, but backed off when the spike reversed itself.

Last week’s announcement that Nissan Motor Co. Ltd. will bring its next-generation Micra to the U.S, coupled with Chrysler Group LLC’s designs on selling the Fiat 500, has Kia is rethinking the Picanto proposition.

“It makes us go back and say, ‘What are they seeing that we don’t see?’” says Michael Sprague, vice president-marketing for KMA at a Sorento media event. “Because we’re all looking at the same information.”

The 4-door Picanto hatchback is sold in Kia’s home market of South Korea, where it’s known as the Morning, as well as in Europe. It features a choice of 1.0L or 1.1L 4-cyl. gas engines and, in the U.K., enjoys a fuel-economy rating of 49-59-mpg (5.8-4.8 L/100 km), depending on the engine and transmission configuration.

KMA officials last year said if they were to bring the Picanto to the U.S., they would wait for the next-generation version, due in late 2010 as an ’11 model.

Currently, the only A-segment entry in the U.S. is Daimler AG’s Smart Fortwo 2-seater, available since February 2008. But deliveries have slumped as gas prices have fallen and, industry watchers contend, the tiny car’s trendiness has worn off.

Ward’s data shows Fortwo sales hit a record of 2,695 units in May 2008. Deliveries remained in the mid-2,000 range throughout the summer and fell slightly in the fall.

Kia Picanto could be U.S. bound.

This year, the Fortwo’s monthly sales totals have ranged from the mid-1,000s to September’s record low of 814.

This trend line follows the decline in pump prices. After spiking in July 2008 to $4.06 for a gallon of regular-grade, the national average this week is hovering near $2.70, according to data from the U.S. government’s Energy Information Admin.

While KMA still is crunching data related to the Picanto, Sprague believes its arrival in U.S. showrooms is unlikely.

“When gas prices in California are still hovering at $3 per gallon or below, it’s not as compelling a reason (to bring the Picanto here) as it was, say, 15 or 18 months ago,” he tells Ward’s.

In addition to the coming Nissan and Fiat A-segment entrants, Toyota Motor Corp. is expected to retail its iQ model in the U.S. by late next year, possibly as a Scion. And Mitsubishi Motors Corp. has confirmed the arrival of its i-MiEV electric car, but with uncertain timing.

Ford Motor Co. is studying the Ka for the U.S.

IHS Global Insight expects the U.S. market’s A-segment will comprise the Fortwo, 500, Ka and iQ in 2015. Sales could total 162,000 units annally, says Chris Hopson, a market analyst with the firm.

Hopson calls the forecast conservative, saying long-term demand for the tiny cars is tied to population moves from rural or suburban areas to urban communities; and to government policies, such as commuting taxes that restrict traffic flow in areas such as Manhattan.

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