Kia Australia will focus its marketing muscle on product values and the company's local tuning program to shake off its “cheap and cheerful” image.
Speaking with media this week, the local arm’s new Chief Operating Officer, Damien Meredith, said Kia has been “on sale” too long in Australia.
Rather than lower prices, Meredith said Kia will soon begin a new campaign to communicate the brand’s strengths to Australian buyers.
"We want to push the quality and the design of the product, highlighting its award-winning status and the value component of our cars,” he said.
“Most important is the Australia-specific setup of our cars. I don't think we've actually told that story to the Australian consumer, yet. We've told you guys (the media) and you've embraced that, but I don't think the Australian consumer understands that yet. We've got to take that to another level.”
Mr Meredith, formerly the sales director with sister brand Hyundai and little more than a month into his new role as Kia Australia COO, said the brand has not been performing as well as it could.
“Over the years, we’ve conditioned the consumer that we’re a cheap and cheerful car company, and we’ve got to change that. It’s time for the consumer to understand that we’ve got a fantastic product, it’s put together with high quality and that’s where we’ve got to focus”.
At current levels, Kia expects to finish 2014 in the neighbourhood of 33,000 sales - up from 29,778 in 2012. Mr Meredith believes 45,000 is within reach, although not this year.
Mr Meredith said the sales split between Hyundai and Kia in most markets is around 60 to 40 in Hyundai's favour, but in Australia it's closer to 75/25.
“In normal mathematics, if Hyundai was selling 100,000 cars in some other market, Kia would sell 60,000. So, we have got a fair bit of work to do.”
Part of Kia’s push to 45,000 annual sales, he added, would come not from competing with stablemate Hyundai but by taking sales from the Japanese and European brands.
"We don't need to take sales from Hyundai to achieve our goals, I don't see that as our job. Sure there will be ‘friendly fire’, but for us to grow, we have to take conquest sales from the Japanese and the Europeans,” Mr Meredith said.
“We believe we can take share from the major Japanese manufacturers. That’s what’s been happening over a period of time with the leading Japanese brands.”
Cerato Must Improve
A sore point for Kia’s local arm is its brand-new Cerato, languishing in 11th place in Australia’s small car market.
“It [Cerato] deserves to do a lot better than that,” Mr Meredith said. “If we can get Cerato to five percent of the segment (currently 2.9 percent), and if we hold our position in other areas, we’re at 45,000 sales across the brand straight away.”
Cerato may have seen crucial improvement already, catching 3.3 percent of the segment for June with 811 sales - compared to 570 for the same period in 2013.
The current Cerato range opens with the 1.8 litre S at $19,990. Kia won’t be cutting prices to boost Cerato sales, but we may soon see a new 1.6 litre entry model in the range.
"We're looking at the 1.6 Cerato, it would be a bit of a circuit breaker for us we believe,” Mr Meredith said.
“Early stages, but I would love to have a 1.6 Cerato to sharpen the range and get a price-leading situation happening."
Mr Meredith believes the Cerato can be the fifth best-selling small car in Australia within the next three years.
In fact, he believes that every Kia model can manage at least fifth place in its segment - with the exception of Carnival, which he believes will take first back from Honda’s Odyssey soon after the new-generation model arrives.
"We've got to work harder at getting the models that compete in the big sectors - Cerato, Sportage - in front of the public,” he said.
7-Year Warranty Under Consideration
Kia’s current five-year / unlimited-kilometre warranty is already one of the strongest in the local market, while in Europe, the brand offers a seven-year / 150,000km warranty.
Mr Meredith admitted today that the idea of a longer warranty continues to be a point of consideration for the Australian arm.
“We’re thinking about it, and we’re doing the sums,” he said. “When you’ve got 2.8 percent of the market and you want to grow that share, you’ve got to differentiate.”
“If an expanded warranty were to come to fruition, it would be one of the major differentiators for us. Not only in getting people in to buy our product, but also to help residual values over time.”
As a point of differentiation, seven years would go a long way, with even Citroen’s six-year warranty covering only a select number of models.
And Kia’s new Capped Price Servicing program?
“Feedback from dealers right now is ‘so far, so good’,” Mr Meredith said.
Kia has 122 dealers nationally, but only five standalone dealers in the country.
Mr Meredith said the company does not want more dealerships, but it does need to improve the experience both for buyers and for dealers.
“Our dealer network development guys have done a really good job with our facilities around Australia, but we have to do is lift the sales per dealership.”
“We have to make our brand profitable for the dealer, we have to get that throughput up as quickly as possible. Our goal is to be the number one or two franchise for each of our dealer groups in Australia.”
He said the company will invest more in the dealer network and national facilities, “which we have been doing already,” and dealers will be rewarded for meeting certain goals.
"Kia head office wants to see the Australian arm grow, but not in a silly fashion.”
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