Avante challenged by new K3, SM3

Import brands set to fuel competition in compact car market


Hyundai Motor’s flagship compact Avante has never lost its top-seller position in the nation’s small family car segment in the past 12 years.

The Avante sold 81,256 units in the first nine months of this year, making up more than 60 percent of compact car sales here.

However, the game seems to be changing in the second half of the year, as other carmakers are revving up the competition with their new models.

For now, industry watchers say, the strongest “rival horse” for Avante is Kia Motors’ new compact K3, the latest and smallest version of the carmaker’s hit K series.

More than 10,000 customers have signed to purchase the K3 as of Oct. 5, just 19 days after its official launch on Sept. 17. Kia, having poured 300 billion won ($270 million) into the K3 project, earlier set a sales target of 19,000 vehicles this year. 

Compared to the voluminous Avante, the K3 carries a more sports coupe-like shape with the K series’ signature radiator grille envisioned by the former Audi designer Peter Schreyer, who currently oversees the Kia car design.

The car also features specs that used to be attached to higher-segment cars such as the parking assistance system, cruise control, a sliding headrest and the telematics service UVO which allows drivers to control their cars with their smartphone or other IT devices.

The sibling rivalry between Hyundai and Kia is also expected to repeat in China where K3 production started in September and the vehicles will hit the world’s largest car market this month.

Renault Samsung Motors also launched the New SM3 in late August, on which the Korean operation of France-based Renault pins high hopes of reviving its sluggish sales in recent years here.

In September, the SM3 sold 1,055 units, fewer than its rivals. But the new model drove up the overall car sales in the sector, which saw a slight increase of 4.7 percent in domestic sales last month from August.

“Potential SM3 customers are believed to have delayed their purchase until the K3 was unveiled later last month. The real rivalry with the K3 will start in October,” said a RSM spokesperson.

Even though it is a facelift version, the SM3 is the first vehicle in the world to adopt Nissan Motor’s new enhanced engine H4Mk and an Xtronic continuously variable transmission, according to the carmaker.

Its digitalized dashboard and electric parking brake are the first of their kinds to be introduced in the compact class here, adding a more luxurious interior feel.

The special stereo system, supported by Bose, the maker of pricey speakers, in particular, seems enough to appeal to young drivers ― the car’s main target audience.

When it comes to fuel economy and engine performance, the three models show little difference.

Avante and K3 offer 140 horsepower and 17 kilogram-meters of torque, while the New SM3 features 117 horsepower and 16.1 kilogram-meters of torque.

Despite its weaker power, the SM3 provides a better fuel efficiency of 17 kilometers per liter, compared to Avante’s 16.5 kilometers and K3’s 16.7 kilometers.

Their prices range from 14 million won up to 22 million won depending on specs.

Industry watchers say the nation’s compact car market would see a fiercer competition in the coming years. Coupled with the new models, more Korean drivers ― who used to prefer large sedans ― are turning to smaller cars due to renewed awareness and fuel economy.

“As compact cars are equipped with higher specs and many people no longer show off their social status with large cars, the entry car market may further expand,” said Kim Pil-soo, professor at Daelim University College.

Kim said, however, the new K3 and SM3 will not pose immediate threats to the powerful Avante, showing more expectations toward the smaller cars of import brands.

“In order to further accelerate the compact car market, a real rival for Avante should appear. But it does not seem easy considering the dominance of Hyundai and its Avante here,” he said.

“Carmakers like BMW and Nissan have a very powerful lineup of small cars. Based on their price competitiveness, they will affect the local compact market directly.”

BMW Korea plans to launch the new five-door hatchback 1 Series this week. The prices are largely expected to be in the 30 million won range, the lowest for BMW aside from its Mini vehicles.

By Lee Ji-yoon (jylee@heraldcorp.com)