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Kia strengthens the classic car dealership
Kia Austria CEO BERNHARD DENK speaks in the KFZ Wirtschaft interview about the difficult year 2017, about the ambitious goals for this year, about the Kia dealer network and why he believes that the classic car dealership has a future.
Kia strengthens the classic car dealership
Automotive industry: Mr. Denk: Your balance sheet for 2017?
Bernhard Denk:2017 was an acceptable year for Kia Austria, but it didn't quite go as we had imagined. We were able to increase volume slightly compared to the previous year - specifically from 9,403 to 9,433 units - but lost market share in the process, and that's never a good thing. We are now exactly at 2.7 percent.
What is the primary reason for this?
Partly because we delivered a lot of Caritas vehicles in 2016, 400 units, in 2017 only 100. However, we were very positive about the purchase contracts we signed in the second half of the year. We had a significantly higher order backlog at the end of 2017, an increase of over 50 percent compared to the previous year.
What are your three personal goals for 2018?
We want to create 10,000 units this year. This is, so to speak, our magical limit that we want to cross together with our dealer network. Apart from that, we want to significantly strengthen our fleet business. In this regard, we have entered into a cooperation with ALD (automotive fleet management and leasing; editor's note). And finally, we want to become even leaner and more efficient with our dealers in terms of processes.
What does that mean exactly, leaner and more efficient?
We have “MySales”, which is our sales system through which we process all offers and orders. We will expand the system with an e-lead module so that the salesperson will be able to respond to customer inquiries both from the workplace and from a mobile device as quickly as possible and provide feedback on where the customer can get information or, for example, take a test drive. The entire process should be simpler and faster.
“Our target for return on sales for Kia dealers: 1.5 to 2 percent.”BERNHARD DENK, CEO KIA AUSTRIA
Kia has great potential in the fleet sector. The proportion of business customers is only 20 percent.
We have to be realistic. We will not increase the share to 40 percent or more, as is the case with some large manufacturers. In fact, we want to grow in smaller steps to 25-30 percent in the fleet segment in the medium term.
What are you doing to achieve this?
In addition to the cooperation with ALD, we have changed our fleet program slightly towards larger fleets: We are offering the entire Kia dealer network attractive conditions starting this year. Overall, we hope for a significant increase.
How is your dealer network currently structured? Are there any white spots left?
Our dealer network basically covers the whole of Austria. We have two white spots: One is Horn in Lower Austria, where to be honest we can't really make any progress. The other is in Spittal an der Drau. We are holding discussions with a potential candidate, which could happen at the beginning of 2019.
What is the average return on sales at a Kia dealer?
We are around 1.1 to 1.2 percent. However, our goal is around 1.5 to 2 percent.
What do you do for it?
I believe that our model range in 2018 is very attractive. We are now in the first full year of the Stonic. We will also be renewing the cee’d family over the course of the year, the first preview of which will already be visible at the Geneva Motor Show. I also think that Kia has great potential in environmentally friendly vehicles. We already have the Niro as a plug-in and hybrid in our range, and a fully electric version will be available at the end of this year with a practical range of around 330 km. This is a real alternative, not just a second vehicle. The Soul will also have a significantly improved electric version in 2019. Sales of plug-in hybrids in Austria are still somewhat sluggish. You would need some support from the government.
Do you think the eco-premium is likely?
I would be happy about that, but I don't think it's likely. The bonus would make sense because it would get the “old stinkers” off the streets.
Are you satisfied with the current Kia model range?
We are now almost a full-service provider with the Picanto as a stylish small car, the Rio as an attractive representative of the B segment, the Stonic as a compact SUV crossover and the cee'd. We cover the SUV sector well with Sportage and Sorento and rely heavily on the Niro, the second model on the market with all three drive variants.
"I would be happy if the eco-bonus comes along. I don't think it's likely."GF KIA AUSTRIA BERNHARD DENK
The Stinger is just a prestige product?
The Stinger is an image carrier for Kia. We are extremely happy with the car.
How many units do you want to sell?
We expect 40 to 50. We'll be happy if it's 70, and if it's 35 we won't bury ourselves in the ground.
What requirements are there for retailers in this regard?
The Stinger is not part of the target agreement. We don't want to build up any pressure, so the last three cars have to be shot out quickly at the end of the year. Our strategy is to sell a consistent volume over a longer period of time.
A final question: What will the car dealership of the future look like?
I'm pretty confident the dealership will pass it on. There will be additional formats, but people will still come to the car dealership and take the test drive there. We need the car dealerships, that is my personal belief. The classic approach of going from one car dealership to another to get advice is dying out. Nevertheless, I think that touch and feel will continue to be wanted and demanded by customers in the future. The car dealership itself definitely has a future. I am convinced of that.