Taxi Demand Likely to Shift to Sonata and Grandeur for the Time Being
[Asia Economy Reporter Kim Ji-hee] Kia Motors will end production of the 2nd generation K5 taxi model in April. Since the 3rd generation K5, introduced in 2019, did not have a taxi model at all, the discontinuation of the older model means that K5 taxi models will become hard to find for the time being.
According to industry sources on the 13th, Kia recently decided to produce the 2nd generation K5 taxi model only until April. The plan is to produce an additional total of 3,500 units at a rate of 900 units per month over the remaining four months before discontinuation. Kia is reported to have already shared this discontinuation schedule with related parts suppliers and requested inventory management. Regarding this, a Kia official stated, "(The discontinuation of the K5 taxi) has not been decided yet."
With this discontinuation, the only taxi-dedicated model Kia will sell is the K7 Premier. Previously, when Kia launched the 3rd generation new K5 at the end of 2019, the taxi model was excluded from the lineup. This was for the same reason Hyundai Motors broke the perception of "Sonata = taxi" and did not release a taxi model for the new Sonata as part of a premium strategy. Accordingly, existing K5 taxi demand is expected to shift to the Sonata of the same class. The Sonata taxi is a best-selling model with annual sales around 25,000 units. Although last year it recorded only 19,373 units due to the impact of the novel coronavirus disease (COVID-19), its presence in the taxi market remains overwhelming.
As the trend toward premium taxis grows, the popularity of the Grandeur taxi has recently increased, and some demand is expected to move toward the Grandeur. Grandeur taxi sales (5,756 units) surpassed K5 taxi sales for the first time last year, threatening the dominance of mid-size sedan taxis.
However, the concentration of the taxi market on Hyundai vehicles is likely to be a temporary phenomenon. Above all, since it is not easy for Kia to completely give up on K5 taxi demand, it is analyzed that they will quickly seek alternatives. K5 taxis have consistently maintained demand exceeding 7,000 units annually, with 8,073 units in 2017, 7,644 units in 2018, and 7,103 units in 2019. Even amid the COVID-19 crisis last year, which reduced overall taxi sales, recording sales of about 5,000 units is encouraging. For these reasons, there is cautious speculation that Kia may launch an additional new K5 taxi model following this discontinuation.
An industry insider said, "The taxi market has a steady demand due to a fixed vehicle replacement cycle, making it attractive to automakers," adding, "Even if Kia stops producing the old K5 taxi, it will likely try to maintain related demand through other means, such as launching a dedicated taxi model, which has been suggested before."
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