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Kia considers second outlet

Kia is considering opening its second wholly-owned dealership to fill a four-year open point.

The location is Manchester city centre.

Although Kia has six dealers in the greater Manchester area, none has been willing to expand to the high cost centre.

Kia already has a facility in nearby Bolton and says one option under consideration is to buy a site in the city centre and lease it as a satellite to Bolton.

It was in talks with a landlord, but these have fallen through. However it still hopes to fill the open point by mid year.

“We have three options,” says Kia UK managing director Paul Philpott.

“Own and lease a site, own and run it ourselves or find a franchised partner. We have no strategy for Kia to be a retail group, but it’s an option to fill Manchester centre ourselves.”

Philpott is also considering setting up a sponsored retailer programme, but says it depends on whether Kia runs into difficulties in filling around 30 locations.

“If demand continues at its current pace, there will be no need for a sponsored dealer programme,” he adds.

“We want 170 dealers by 2010 – we had 140 at the end of 2007. The next six months will be key.”

Kia has made a conscious effort to attract more regional groups to the network, sometimes at the expense of its new plc partners.

Pendragon held eight Kia franchises at the start of last year; now it has two sites (Gateshead and Stourbridge) through “mutual agreement”, according to Philpott.

However, Lookers has three sites and is looking at opportunities to expand.

Philpott adds: “Regional groups are hungry to expand. They are going from one or two to two or three sites.”

They are being enticed by rising profitability. Average margins per car are £1,000, while first quarter return on sales is close to 1.5%, up from 1.1% last year on the back of retail sales up 60%.

The “ultimate aim” is 2%, Philpott said.

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