Kia Motors UK president and CEO Paul Philpott talked to Simon Warburton at last week’s European product update event in Barcelona about Kia’s success story in the UK and how the automaker’s success has shown some similarity to the remarkable achievements of fellow-Korean company Samsung.
An automotive industry veteran of 24 years, Philpott took up the British sales unit’s reins this summer after having previously been COO at Kia Motors Europe and prior to that, managing director at Kia UK. He previously was with Ford and Toyota.
j-a: How was the recent Paris motor show for Kia? How did you react to the French Economic Redevelopment Minister, Arnaud Montebourg, apparently declining to visit Kia or Hyundai?
PP: “For the first time in Paris, we had a stand comparable to the big boys – we had 3,000 sq m there. I think the other great benefit for us was people go ‘wow’ – is that the Kia range?
“We unveiled the new pro-cee’d, which gives us a sporting halo, we get another high-performance model next summer, which is another string to our bow.
“I would not really want to comment on the French Minister’s comments. He did not come by our stand. All I would say is Kia and Hyundai are both growing rapidly in Europe. More than 60% of our combined sales are built in Europe by European workers. Why are French products not growing? Maybe because they are not so strong.
j-a: How do you think Kia is perceived at the moment?
PP: “It would be completely unrealistic to say it has moved to where we want it to be. There is still not enough top-level awareness of Kia.
“There is still a proportion of the population that knows nothing about us. [However] most people now say ‘seven-year warranty, up and coming, momentum and fast changing.’
“A lot of dealers say if they sell a car into a street where there has previously not been a Kia, they will get two to three enquiries within six months from people living in [that] street.
“We are on track to achieve a new record of 65,000 sales this year – up 21% – more than double in four years. Word of mouth is going to be our biggest asset. We have not gone out to dramatically increase our fleet business, it is fleet and retail sectors.”
j-a: Can you see Kia competing with German brands?
PP: “I used to work in the Frankfurt office – it is very difficult to compete with the German premium brands at what they are really good at [but] there is no reason why Kia cannot compete with Volkswagen [for example]. It would require an unrealistic investment to ever think we could compete with Audi, BMW or Mercedes.”
j-a: Are consumers’ ideas changing concerning Korean brands and has that filtered through to Kia sales?
PP: “Don’t underestimate the role of the seven-year warranty – that overcame previous perceptions about Korean car quality more than anything. If you look at Kias on the road, it is a great marketing message for us.
“It is not dissimilar as a story to Samsung in Europe, which came in with low-priced products. A certain part of the population bought them, then they worked on quality and design and are [now] outselling Sony. Who would have believed that 20 years ago? The Kia story has some parallels with Samsung.”
j-a: Has the impact of the UK’s scrappage scheme now finally finished?
PP: “The last scrappage units, we had registered were [during the] first quarter, 2010. Yes, it was a catalyst that gave us an injection to a time when we brought out the new c’eed. It also helped us grow our dealer network. Based on volumes going from 35,000 to 40,000 with scrappage, that [let] us invest [but] we have gone on growing when scrappage has gone.”
j-a: Europe is undergoing severe economic problems, but the UK market has seen a modest buoyancy. How does Kia UK perceive the domestic outlook and could the UK government introduce any further incentives?
PP: “The UK car market is around two million – in September it was up 8%. It is – compared to the rest of Europe – a stable, competitive, strong market right now.
“Of course, we would like any stimulation that would sell cars, but whether something more fundamental is a [topic] for discussion.
“This year we are growing 21% – it is 1,000 extra units per month. As a growing brand, I am not a big advocate of further stimulation that somehow distorts the market.”
j-a: Are you satisfied your warranty is sufficiently robust, that consumers understand it is not tactically motivated?
PP: “Our warranty is a seven-year, 100,000 miles warranty, it is fully-transferable, there is no insurance element to it. We had people going into dealers saying: ‘what is the catch?’ People have now seen there is no tactical promotional reason. We have had it since 2010 and it is a core part of our brand offering.
There is not market scepticism – but maybe a bit of surprise – even today when someone who is not familiar with Kia it is a sharp intake [of breath].
“We have to get more of our new car range in front of people all the time. We have individual reviews on our website – it is like trip adviser – we are confident there are more positive than negative – it is not controlled in any way.”
j-a: Can you continue growing in the UK at such a fast pace?
PP: “We will not double in the next four years, but we will grow appropriately. Our mid-term is to get to to 100,000 sales – I won’t state a time. If it is not sustainable, what are we in this for?”
j-a: To what extent is fleet important to Kia in the UK?
PP: “The split for fleet is 55% retail and 45% fleet against a market of around 52% [overall] fleet. One of the things we are finding is new fleet customers want strong range.
“We have success in fleet with cee’d and Sportage, but we have new Rio, a new cee’d and a new Sorento and we have brought out a new Optima.
“Our residual values have improved so much with our new product range [and] our lease rates are more desirable.”
j-a: How is Kia’s worldwide profile being promoted?
PP: “We sponsor the [football] World Cup and have signed up to 2022. The UEFA Championships are signed up to 2016 [and] we are the global sponsor of the Australian Open.
“What we have to do locally is give it more depth. We spend around GBP20m in the UK across the whole suite of media.”