A report from Reuters indicates Hyundai and Kia are preparing several low-cost SUVs for China to go up against the local automakers.

The biggest market for Hyundai and Kia is China right now, so it doesn’t come as a surprise the South Korean duo is working on a few high-riding models to cater price-conscious Chinese buyers. The first of many to come will be a simple, compact Hyundai SUV programmed to hit the assembly line in November next year at the company’s factory in Changzhou. A year later, a subcompact SUV also with the Hyundai badge will enter production at the Chongqing facility.

As far as sister brand Kia is concerned, it will reportedly introduce a midsize SUV in China in 2017 and then a subcompact crossover in 2018.

To achieve lower costs of production for these models, both Hyundai and Kia are going to work more with Chinese suppliers and acquire the necessary parts from within the country. The two car manufacturers already have an R&D center in Yantai and are on the look to boost local engineering, according to an insider cited by Reuters.

Hyundai and Kia are increasing efforts to tailor Chinese customers as a response to a decrease in market share which dropped to 8.9 percent in 2015, representing a seven-year low. This happened because local car manufacturers are coming out with more desirable products than they did a few years ago, thus affecting Hyundai/Kia’s market share.

That being said, some industry experts believe that low-cost SUVs for China could have a negative impact on the quality and brand image of the two brands. According to James Chao, IHS Automotive’s managing director for Asia Pacific, “going down market into low-cost SUVs may actually damage the brand in the long term.”

It remains to be seen whether these affordable SUVs for China will prove to be a success in a sea of locally-produced, low-cost models that are gaining more and more traction.

Source: Reuters

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