While UK market sales look likely to fall steeply this year, one manufacturer is seeking to boost numbers through its ground-breaking guarantee and a raft of new brands. As Kia Motors UK launched its upgraded Sorento and new Venga in Barcelona this week to British media, managing director Michael Cole talked to just-auto about how the carmaker wants to drive its retail share from 2% to 3%.
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Kia Motors’ UK unit is banking on its seven-year warranty and new models to help fill the gap in an inevitably falling market as the government-backed scrappage scheme comes to an end.
The Korean manufacturer estimates a “significant decline” in cars sold through the deal, with numbers falling from 282,000 units last year to 115,000 in 2010, but is nonetheless aiming to replicate its own record-breaking 50,000+ sales in 2009.
“Most of the industry would say the UK market would be around 1.8m [units] – we can expect realistically to see a decline of 10% this year,” Kia UK managing director Michael Cole told just-auto.
“I want to do 50,000 units in a 1.8m market and it requires us to grow our share. I look at 2009 and we did well with scrappage, but outside of that, we grew our retail share from 1.8% to 2%. What will happen this year to continue to drive that? Growing awareness of the Kia brand can only be helped by a seven-year warranty and by two new products in the Venga and Sorento.”
Allied to that, concrete growth proposals from Cole include increasing the Kia dealer network from its current 146 to between 165 and 170 outlets, with the rise occurring in major metropolitan areas. Those dealers are building on the warranty with the Kia MD reporting a “fantastic reaction” from them to the new seven-year offer.
Cole believes the extended guarantee will underpin customer faith in the Kia range but does not see competitors offering a similar deal anytime soon.
“The real reason for the seven-year warranty was a statement about our confidence in our products,” he says. “The idea was to be able to prove to people the cars made in Europe were equal to those in the domestic market. Someone might come next week and say seven-year warranty as well, but I don’t think they will.”
Kia has mounted a major advertising push around the seven-year offer, with greater showroom footfall as a result and Cole says this will continue to be the marketing focus in the first quarter of this year using TV and outdoor poster campaigns.
And capitalising on parent group Hyundai’s partnership with the football World Cup in South Africa this year, Kia UK will also use the tournament to raise its profile through sponsorship of a ‘Fanfest’ area in London.
Cole pronounces himself happy with the UK dealer network and stresses the importance of the British market, with his operation supplying 20% of western European volume last year. And he maintains Kia has no problem with being perceived as a value brand. “I still want people to look at Kia and say that is really good value,” he says. “But we are not a cheap brand.”
Kia is also keenly aware of its cost base but Cole insists: “The thing is not to let the cost base chase the volume. Because of all the market difficulties, people have been very conscious of that. If we can get back to that 50,000 [units] volume, I am confident we can keep our network healthily profitable.”
Cole highlights the trio of Soul, Rio and now Venga, as proof that Kia can compete in the challenging B segment. “Rio was a very traditional, five-door car offering value for money, then the Soul [which is] funky and fun and now the Venga with space practicality,” he notes.
“The B segment has always been our weakness and when it accounts for so much of the market, going with that three-pronged attack, I am very confident that will go a long way to achieving 3% retail share this year.”
Cole recognises the emergence of Chinese-made cars, but maintains their strong domestic growth will keep them occupied for the time being. “We should only be as worried as anyone else,” he says. “We would be naïve to say we don’t care about it, but anyone coming in with a new product that is price sensitive, then we should be aware, but we don’t think we should be more concerned than anyone else.”
Cole promises “more to come from us” especially by mid-2012. “We produce evolution,” he says.
