Paul Philpott, Kia UK President and CEO, has given just-auto an upbeat assessment of conditions in the UK car market and growth prospects for the Kia brand.
“The market this year is heading for around 2.45m units,” Philpott said. “That’s back at 2007 levels and I don’t think anybody would have forecast two years ago that 2014 would be that high.”
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He acknowledged, however, that the UK car market is very competitive. “It is highly competitive, but the challenge is to attract consumers with good product, value prices and good finance offers. PCPs (Personal Contract Purchases) are putting people on shorter change cycles and that’s also leading to higher sales. And of course there is ongoing weakness in the continental European car market – it’s recovered a bit but is still very low – with excess capacity in Europe also encouraging manufacturers to divert some sales to the UK. But in the end great product with the right packaging for the consumer always wins through.”
With finance programmes acting as a key driver for demand this year, Philpott says the industry in the UK will be closely watching prospects for interest rates, which some commentators have said could start to rise next year.
“Of course, interest rates at near zero will undoubtedly have to go up at some stage,” Philpott says. “All the indications are that it will be in the form of progressive, small increases. In the short-term I think those will be absorbed, but once it gets beyond 1 or 1.5% then it starts to hurt people in the pocket. There’s also the impact of the sterling-euro exchange rate to consider, because interest rates will probably go up more quickly in the UK than in the eurozone. What then happens to the exchange rate, to manufacturers’ margins? There are a lot of implications, potentially, from interest rate increases and it’s something to keep an eye on.”
Kia is eyeing another record year for car sales in the UK. In 2013 the brand sold a record 72,200 cars in the UK, up 8.5% on 2012. However, Philpott maintains that demand for the models revamped in recent years has exceeded expectations.
“If you look back at our recent history, 2010-2012 was a busy time for us in terms of new product; Kia’s product range changed completely. We actually thought 2013 and 2014 would actually shape up as years of consolidation after a period of very rapid growth,” he says.
“We only brought out the new Carens last year, a relatively low volume product, and we have brought out the new Soul this year – also a relatively low volume product. And in both years we have still grown our sales by nearly 10%. We’ve got momentum with a brand that is appealing. Customers are waking up to Kia, to our products, the seven-year warranty, the value, good design.”
Philpott is already eagerly anticipating the next wave of major model renewals for his brand. “If you imagine we work to a 5-6 year model change cycle, then 2010-12 rapidly becomes 2015-2017 or 2018, so we are nearing another busy period of major model renewals. New Sorento comes out in the first quarter of next year and that kicks off a whole new range of new products for us.”
Looking at the growth and success of the Kia brand in recent years, not just in the UK but around the world, it’s clear that the perception of the brand is changing. Philpott stresses the overriding importance for Kia of the retail customer in Britain, rather than fleet buyers. “There are some big players who dominate the fleet area, but we are very much focused on the needs of the private retail buyer. Retail is the driver for our dealers to make money; it’s more profitable than fleet. In the retail market, looking at the mainstream brands, this year we’re at number seven, pushing for number six and this month – so far – we are at number five, ahead of Toyota, ahead of Peugeot. We’re making good progress. And it’s a consistent and progressive path that we are taking.”
