2024 Kia Carnival Expected Price — With Logic

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Kia Carnival Variants

Based on the Kia Carnival brochure, we know that the Carnival 2024 will come in 2 variants — Limousine and Limousine Plus.

Kia Carnival — CBU or CKD?

According to a report from Autocar, Kia will bring the Carnival initially as a CBU and they are likely to initiate CKD process later. Obviously, the urgency, or lack of it, will depend on the demand for the car.

What Is CBU?

Completely Built Unit = The car is imported as is from another country. This process attracts significantly higher taxes as we saw with the Nissan X-Trail.

What Is CKD?

Completely Knocked Down = The car parts are imported from other countries and the car is assembled locally. This approach drastically cuts down the taxes, and thus, prices. This approach also allows Kia to tap into their existing suppliers’ capabilities and source a few parts from their Indian partners. This option only opens up for CKD cars and creates room for further cost reduction (and profitability) during the vehicle’s lifecycle.

2024 Kia Carnival — Expected Price — Case 1: Sales Volumes

Under this condition, let’s assume that Kia want to sell the Carnival in as high volumes as possible. In this case, since the Hycross tops out around Rs. 30.0 lakh ex-showroom, we can safely say that the Rs. 40.0 lakh starting price would make the Hycross buyers seriously interested in this feature-loaded car.

From there, another Rs. 5.0 lakh for the top variant will help them improve their margins as it only gets features worth some Rs. 2.0 lakh in terms of perceived value.

A sub-40 lakh price (Rs. 39.9 lakh) would make the Carnival mouth-watering for the Hycross buyers. However, the Carnival is coming to India as a CBU. So, it will carry huge taxes. To achieve this attractive price point, Kia may initially gauge demand and accelerate or decelerate the CKD process. So far, it looks like they may have to accelerate the process as they have accumulated more than 1,800 bookings from customers without even looking at the price tag.

Since we have had the Carnival in India before with a price tag topping at ~Rs. 30.0 lakh (ex-showroom), the customer expectation is that it shouldn’t cost a whole lot more than that. If it comes at a high starting price, then most of these buyers would back off (like they did with the Jimny). Moreover, our car market is starting to show signs of weakness as we’re seeing even Tata pricing their Curvv below industry standards.

Kia are smarter still and they have priced their cars suitably in the past. Pricing their car at CBU rates initially and then bringing it via CKD will create a lot of buyers’ remorse. So, it’s better to price it right from day one and absorb the losses, which they can make up later when they start selling with local assembly. This would mean that they would have to start the production as soon as possible and deliver as fewer cars as possible via CBU.

With this logic, we can expect the Carnival 2024 to carry the following prices:

2024 Kia Carnival — Expected Price — Case 2: Wide Open Space

Sometimes, sales volume is not the only criterion when positioning a car. Sometimes, profitability takes precedence, and profitability and sales volumes sometimes don’t go hand in hand. It’s totally possible to achieve greater net profitability with a higher price even if it comes with a drop in volumes. In fact, it also helps brand the products as luxury goods, which further helps with the product positioning.

While the older Carnival looked decidedly like an MPV, the new one is a lot more SUV-ish. So, the Kia can expect to achieve decent numbers even with a higher sticker price. After all, they are trying to position the Carnival as a more luxurious alternative to the utilitarian Hycross. The older Carnival wasn’t priced high enough to have enough breathing room away from the shadows of the Innova. Having that space around means they can distinguish the Carnival from the Innova Hycross as a far superior product and convey that with the price tag.

If they stop chasing the Innova, then there’s a lot of room up top as the next best MPV with luxurious interiors costs well over Rs. 1.0 crore (ex-sh). If you’re reading about the Carnival, then you probably already know that we’re talking about the Vellfire. So, the Carnival has a high ceiling to play with the pricing. Even with a Rs. 50.0 - 60.0 lakh ex-showroom price, the Carnival will have no direct competition. Although, it’ll continue to compete indirectly against the SUVs from luxury brands.

With this strategy, Kia can afford to bring the CKD later with a modest price correction and eat up the rest of the price gap after having positioned the Carnival distinctly higher than the Innova Hycross.

Case 1 Or Case 2? Which One Is It?

We believe Kia are more likely to go with Case 1. The reasons for this assumption are as follows:

1. It’s A Carnival: They are bringing back the Carnival to India as Carnival. At the 2023 Auto Expo, Kia showcased the new Carnival. And they were cautious calling it the Carnival as the Carnival nameplate hadn’t performed well in its first attempt. They called it KA4. If they wanted to reposition the Carnival this time around, they would have gone with calling it something else, anything but Carnival.
2. CKD On The Menu: If they didn’t want to achieve volumes with the Carnival, they wouldn’t have hinted towards a potential CKD. Launching it with a reasonable CBU tag (reasonable = some profits after CKD taxes) and then bringing it to CKD levels would create huge buyer’s remorse. The tax gap between CBU and CKD is so big. Just ask the Jimny owners who bought it at launch price. Buyer’s remorse drastically impacts brand loyalty and Kia can’t risk it.
3. Reasonable All Along: Kia have been reasonably pricing their products all along. While they don’t always come across as offering insanely good value, they normally don’t appear overpriced either. A CBU-like supremely high price tag for the Carnival could make it a dead-on-arrival launch. Exception: Only the EV6 GT was expensive all along because it was never supposed to be a sales success. Its primary purpose was to establish a high anchor price for their EV. Later, when the Ioniq 5 launched on the same platform with local assembly, knowing that it’s an EV6 underneath helped it come across as a fantastic value for money car. So, the EV6 did what it was designed to do in India. The Ioniq 5 is doing decent numbers since launch.
4. Cooling Market; Hot Waters: When even Tata are pricing their car below the industry standards, it shows that the demand is cooling off rapidly. At this stage, we can’t expect a brand known for launching well-priced cars to go off the rails and mess up an MPV. They have tasted success with the Carens, which is churning out consistent numbers for Kia. The Ertiga is a consistent performer in Maruti’s lineup. And the Innova made Toyota the brand we know today.

Even the underpowered Triber extended Renault’s lease in India. In the luxury space, the Vellfire also does 3-digit sales pretty much consistently, which is phenomenal performance for an overpriced car. If the Carnival can get the ball rolling, then it can allow Kia to gradually hike the prices while capturing the upper end of the MPV space, where we have nothing right now. With a cooling off market, Kia have limited room for error. Pricing it a little low initially and then jacking up prices gradually is a far better option than pricing it a little high and then calibrating it with offers or price corrections. With the lower end of our estimated prices (Case1), achieving consistent 4-figure monthly sales is very much possible with the Carnival.

We expect Kia to keep the pricing under Rs. 50.0 lakh, if not well under Rs. 50.0 lakh (ex-showroom). If they are as aggressive and serious about the Carnival as I’m guessing they are, they may even price the 2024 Carnival at Rs. 40.0 - 45.0 lakh as mentioned in the Case 1.

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