The carmaker has spent £17m on marketing this year, with adverts on TV for seven months. Marketing director Simon Hetherington said it is now marketing on value and quality improvements, rather than rock-bottom pricing and discounts.
New car margins are “improving” and dealers can see their future with the brand, as new products such as Cee’d SW, Pro-Cee’d, revised Sportage and Picanto come though in the next six months.
Average return on sales, currently just under 1%, is expected to improve with the increased focus on retail sales.
Kia’s management wants to build a “partnership” with its retail operators, but cannot afford to be “nice and fluffy all the time” if a dealer is not performing, said managing director Paul Philpott.
He told AM that “about five to 10” dealers are under termination, “most by mutual agreement”. The manufacturer has around 30 open points to fill, and held a dealer open day last month, when around 20 prospective dealers were invited to learn more about the franchise. Those included groups already representing Ford, Honda and Toyota; potential recruits which Kia sees as important steps towards recognition as a mainstream brand.
In the last two years Kia has been successful in attracting major groups to the franchise, including Lookers, Arnold Clark and Pendragon. Philpott said the results are mixed. “Within four or five Pendragon dealerships we’ve some good performers and some poor performers. But there is a place for plcs with us. I’m happy with them, and am in talks to expand operations with one plc.”
Industry observer Roy Kishor, of Kroll, said: “Kia is expanding its model programme and manufacturing capability in both Slovakia and the United States, which will effectively double capacity. What will be important for the brand’s development is the expansion of the distribution network both in quantity and in quality, to achieve increased market share.”