Following strong retail-led growth in 2003 and 2004, Kia’s retail sales slumped by 40% to 18,000 of last year’s 35,000 sales. It has been replaced by higher cost, lower profit rental business.
“We have pushed supply not created demand,” Philpott says. “We have incentivized dealers to sell but we need to be more brand led by focusing on the strength of the product and consumer offers.”
He has met around 20 retailers – 13% of the 155-strong network – and is promising a return to a profitable business model that is consistent for the network.
The new Cee’d has a key role to play in leading the charge back into retail by helping to raise Kia’s profile with consumers. It will also help Kia to banish its cut-price brand reputation.
Feedback from customers suggests dissatisfaction with the facilities and parking available at some dealer-ships. Philpott is to implement a business model that will allow dealers to make money as well as invest in their premises. But he accepts it will take several years to put into place.
While Kia’s focus is on regaining lost ground in the retail market, Philpott is also keen to take advantage of opportunities in fleet, particularly user choosers and small fleets. He is launching a dealer fleet programme in spring and is looking for 20-30 dealers to join.
They will need a dedicated fleet resource, including sales staff, marketing support and demonstrator vehicles. Kia will provide support through a new fleet field team and a business centre that will generate leads.
Dealers’ sales targets for 2007 are in line with last year’s 35,000, but with less high cost rental business and more fleet/retail sales. It’s a year for putting in place the building blocks for the long term, adds Philpott.