With the launch of the D-segment Optima model in the UK car market, Kia’s dealer development director tells just-auto that it is another important step in the transformation of the company’s position in the UK.
“It begins with the product,” says Simon Hetherington. “Well designed product that presents a strong proposition to prospective buyers is the starting point. And to be successful you need to build the right brand image and retail network as well – product, brand and network are the three essential pillars.”
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Hetherington’s role centres on getting the network right and dealer development is at the heart of that with managing franchising, business management, dealer training (‘Kia academy’) and the whole customer experience team.
“We have transformed the product offering with great designs that are very different to what we did in the past,” he points out. “But it is important not to let the other pillars in the brand transformation process lag that.”
He pinpoints the customer experience as particularly important. “It is all about creating the right environment for the customer in every aspect of their contact with the brand,” maintains Hetherington. “Get that right, alongside the great products, and you build customer loyalty, they tell their friends how happy they are and so on.”
There are costs associated with that and they are split between dealer and manufacturer. Kia pays for things like signage, for example. Interior furnishings are generally the responsibility of the dealer. “We’re very happy with the progress we’re making in this area,” he says.
The UK sales plan for the Optima looks fairly modest, but needs to be seen in context. Kia sold a little under 54,000 cars in the UK last year – for a market share of 2.8%. But it wasn’t so long ago that annual sales for Kia UK were under 30,000 units. Kia, it seems, is a brand that doesn’t want to over-extend itself or lose sight of what it is good at – and the value proposition for the private retail buyer is core. Just under two-thirds of Kia’s sales are to private retail buyers. The plan is to gradually extend into other areas of the market to raise volume and do that in a way that is sustainably profitable.
Kia is aiming to sell around 1,600 Optimas in the UK in 2012. The car has been a hot seller in Korea (where the UK-supplied Optimas come from; they are also built in the US), and supply might be an issue. “We’re not going to be over-ambitious,” Hetherington affirms. “But the Optima makes an important brand statement. It says something about where Kia is heading. We want to build our reputation and extend our appeal as a more serious player in the fleet market.”
The D-segment Kia Magentis model ran out in UK sales around a year ago, so the new Optima will give the company something of an incremental sales lift in 2012.
The attractively styled Optima is clearly aimed with the fleet sector in mind, but it’s probably going to have greatest success with the smaller fleets and niches that Kia is targeting, as well as user-choosers who Kia hopes will be increasingly attracted to well-designed products like the Sportage and Optima.
“But we are of course foremost a retail brand,” Hetherington acknowledges. “And we want to offer quality and value.”
There is also another thought about Kia, the rejuvenated value brand. We’re in hard economic times, as people like Sergio Marchionne keep reminding us. Even if Europe’s economic crisis stays under some sort of control, there’s more than an air of austerity in Europe’s low-growth ‘mild recession’. The UK is also seeing belt-tightening, the economy likely to be sailing very close to recession in 2012. The car market may well struggle to match 2011’s 1.94m units this year. The risks to the current industry forecasts of 1.8m-1.9m for 2012 do seem to be on the downside, with more uncertainty than usual thrown into the mix.
Hetherington is well aware of the challenges that the market presents for all, but reckons Kia is relatively well-placed.
“Difficult economic times tend to benefit brands like Kia,” he says. “We tend to be perceived as offering good value and, quite rightly, maybe people gravitate towards that in tougher times. But crucially, we now have great product across all the major market segments and a brand that is recognised for having much improved designs.
“And increasingly we have a dealer network and customer experience to match the attractive high quality products that we are bringing to the market alongside things like our seven-year warranty that bring peace of mind. It’s a joined up strategy that augurs very well for both the immediate challenges in the marketplace and prospects for Kia in the UK over the next five years.”
See also: PRODUCT EYE: Kia Optima 1.7
