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Stand by for a new small-car price war


New-car prices are already at 20-year lows but a new battle is about to bring even sharper deals.

South Korean car makers Hyundai and Kia are about to embark on their biggest challenge yet to the established Japanese brands.

Both companies have had radical management changes at their Australian head offices ahead of the Free Trade deal that will eliminate the 5 per cent import tariff on South Korean cars, due to be ratified later this year and introduced early next year.

Hyundai's fledgling sister brand Kia has poached a high-ranking executive from Hyundai Australia and appointed him as the new boss.

Former Hyundai Australia sales director Damien Meredith has been hired as the chief operating officer at Kia Australia, effective May 19.

Mr Meredith helped double sales at Hyundai since 2005 and the company is now the fourth-biggest brand in Australia behind Toyota, Holden and Mazda and ahead of Ford, Nissan, Mitsubishi and Honda.

Kia is currently only just inside the Top 10, selling about one-third the vehicles of Hyundai Australia, believed to be the largest gap between the two sister brands in any developed market.

The new appointment is likely to drive competition in the coming months and force rival brands to respond, giving buyers a greater choice of discounted cars.

"I believe there is enormous potential in the Australian market," said Mr Meredith. "It is my aim to make the most of that potential and grow the business in every direction."

Although Hyundai and Kia are partner companies and share automotive technology, development and design resources, their sales and marketing operations and dealer networks are fierce rivals.

While Australians helped drive Hyundai to a record of almost 100,000 sales in 2013, Kia has been slower to gain popularity.

Kia Motors Australia arrived as a factory-backed operation in 2006 but it took seven years for the subsidiary and all its head office resources to overtake the sales peak set by the former independent distributor in 2005.

Mr Meredith, who also previously worked for Honda for 20 years and Volkswagen for three years, is credited by industry peers as the driving force behind Hyundai's sales surge in Australia.

Hyundai Australia may have been blindsided by Mr Meredith's sudden departure but it has been hiring high-ranking executives from rival car brands for years.

In October 2012 Hyundai appointed John Elsworth, a 22-year Holden sales and marketing veteran, as its chief operating officer in Australia.

Under Mr Elsworth's leadership Hyundai Australia posted its all-time high sales result of 97,000 deliveries in 2013 and is on track for another record in 2014.

Both Hyundai and Kia have increased sales so far this year even though the new-car market has slowed.

Hyundai sales are up by 4 per cent and Kia sales are up by 2 per cent in a market that's down by 3.1 per cent from January to April compared to the same period last year.

This reporter is on Twitter: @JoshuaDowling