What did Kia tell dealers about returning to full production?
Kia plans to produce more cars in 2023 and says it has invested heavily in Georgia and Mexico to ensure those cars are built.
However, each production constraint must be managed separately. Depending on supply constraints, production may shift from Sportage to Forte or from SX to LX models.
Kia’s horizontal organizational structure allows us to be flexible and change production on the fly. I’ve seen production numbers fluctuate, starting at 45,000, dropping to 20,000, and back to 40,000. Although the composition of these units differed dramatically, their flexibility was very powerful.
How are Kia dealers dealing with inventory constraints?
Many dealers had to purchase their own cars for customers to test drive.
Because we sell cars that arrive in 30, 60, or 90 days, we also had to change our sales process. This is a big change for both merchants and consumers. The arrival date is also unreliable due to logistical issues with transportation. ETAs can be set up, but rail disruptions, truck driver shortages, or port chaos make it difficult to keep consumers informed where their vehicles are. Dealers have never had to do that before. This has been difficult because it’s a world of instant gratification and consumers don’t understand why they can’t accurately track their orders.
How will Kia Motors’ sales incentives change during this time of low inventories, and evolve as production ramps up?
Sales incentives have always been determined by the intersection of supply and demand. There are no or very limited incentives when demand for a particular model significantly exceeds supply. What Kia has done well is keep the vehicle priced and offer great value on MSRP alone. The focus is on maintaining his MSRP at a level that provides great value to consumers. As a result, there have been no incentives for the past year and a half, but as the supply and demand curve shifts, certainly with certain models, Kia will slowly introduce incentives.
Me— In 2022, Kia Motors posted a 1.1% year-over-year sales decline versus 2021, setting records for December and the fourth quarter. What do you expect in 2023?
The world is in a very fluid state and we don’t know if another 5pt interest rate hike will happen. This definitely has an impact.
That said, Kia’s production has increased and dealers are poised to sell more vehicles. I expect Kia to sell significantly more cars in 2023 than he did in 2022. Whether it’s 5% or 20%, it’s directly related to the health of American consumers.
Kia’s average transaction price has risen and now payouts are increasing due to rising interest rates. Are Kia dealers concerned about how this will affect value-conscious shoppers?
People have been operating in this abnormally low interest rate environment for 20 years. We entered an age of excess and everyone wanted the top line of every vehicle and everything they could afford whether it was what they needed or not. We’re shifting to a scenario where consumers are focused on buying something that fits within their monthly budget and they’re returning to normal trim structures.
Interest rates will become more focused on what consumers can afford, rather than what they want. Kia is well positioned to take advantage of it.
How are Kia dealers performing in terms of profitability and is it sustainable?
Kia was in a golden age of products. Telluride, new Sorento, K5, new Sportage and revamped Seltos are coming in his 2024. Its momentum and well-priced groundbreaking vehicles have certainly contributed to profitability for both Kia and its dealers. For nearly two years, we have exceeded the average profitability of mass market brands. So this is a great position for a dealer, and it’s very different from when it was consistently under the mass market.
Now the dealer needs to adjust. Kia dealers’ job is to keep profitability above the mass market average. Both the mass market average and the Kia brand saw shrinking margins on sales. Kia is still above average for mass market brands and our goal is to maintain that.
The question is what dealers do with the money they’ve earned over the past few years and how much they reinvest in dealership operations to improve the level of customer service.
Adoption of the new facilities program has been very high, with many dealers upgrading facilities and capabilities, adding staff and improving processes.or [plus] The manufacturer’s guidance should enable Kia dealers to maintain profitability above the mass market average.
Niro EV and EV6 are available in all 50 states. Were there any challenges getting dealers ready to sell EVs?
Kia gave every dealer the opportunity to participate and the investment was small compared to other brands. There are too many areas in the country with poor electrical infrastructure that can only handle Level 2 chargers. Once you start using these fast chargers, the cost is no longer on the charger, but on upgrading your electric service.
This can be prohibitively expensive for many dealers and is a challenge facing the United States. With a power grid like California’s, how can he double the demand for power without setting the whole state on fire?
Are Kia dealers worried that EV9 sales will be affected as imported EVs no longer qualify for the $7,500 tax credit under the Inflation Reduction Act?
There’s a lot of angst from headquarters and dealers about the introduction of much more expensive new EVs priced and sold on the basis of a $7,500 profit. would change to Because, in general, they have a much higher income per capita than the average consumer. They were very astute and very focused on the $7,500 rebate. Now it doesn’t matter to this huge percentage of consumers whether the car is made in the US or abroad. It’s a change for the United States, this drive to electrification.
What is still missing from your product line?
There are two things Kia dealers want to see. The first is a midsize pickup truck and the second is a large SUV, even bigger than the Telluride. Hopefully, as electrification resets the playing field, we might see an EV midsize pickup truck. It’s the ideal place for Kia to enter its pickup truck market.
What is Kia’s position on subscription services for features that are built into the vehicle or that can be enabled using software after purchase? Do you have?
There is a lot you can do with telematics today. Kia has invested in Kia Connect services specifically to provide features his EV customers are used to or expect when riding an EV. It’s now a matter of pricing. Will consumers afford it, will Kia need to bring the price down, or will it just add more? [functionality] to justify it?Dealer currently has no role [in Kia Connect] As a seller, if you sell a subscription service, as long as the subscriber continues to I would love to see more models from old cell phone stores that I can get my hands on some of.
What is Kia’s position on over-the-air vehicle maintenance updates? What do Kia dealers think the dealer’s role in such updates should be?
We haven’t explored it that far because it’s not yet a reality, but we want to make it easy for consumers to do it. They benefit from being able to perform small over-the-air updates for software changes that do not require consumer intervention.
A huge infrastructure has also been built to service Kia’s vehicles. I think there is still a place going forward, because OTA updates can’t fix everything.