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Kia needs an image makeover
If image is everything then Kia has some work to do.
This is the view of Damien Meredith the Chief Operating Officer of Kia Australia.
Talking to the industry at the Australian Open in Melbourne (of which Kia is a major sponsor) Meredith lamented that Kia has a history of being promoted as a discount vehicle. In his words “The cars have been ‘on sale’ for too long”.
He sees Kia’s image as being “cheap and cheerful”. But if you keep offering cars based on cheap prices, the cars tend to get the image that they are cheap in quality as well. If people think your quality is also cheap, then there is not a lot of cheerfulness in the equation. You are buying the car because you have to, not because want to.
“We want to lift the brand” Meredith said “We don’t want it falling off the cliff again”.
Last year they didn’t exactly fall off the cliff, but they did stumble. Their sales in 2014 were 6% below 2013. Their biggest seller, the Rio, was down 13.5%. The overall market was down as well, but only by 2%.
Furthermore, Kia accounted for only 2.5% of the total Australian market in 2014. What particularly hurts is that their sibling company, Hyundai, sold 9%.
So what can they do?
Meredith says they are going to focus on the quality of their product rather than trying to capture buyers with low pricing. It’s hard to image a car company that wouldn’t want to do the same thing.
But Kia is backing the claim to have good quality products by offering a huge 7 year warranty. In their words it represents “amazing faith in the product”. And indeed it does.
The warranty is transferable between owners so if a new car buyer sells the car after three years (which is a typical figure), it still has a four year warranty, which is more than some new cars.
The other thing that you will notice about the new Kia approach is that their ads on television will be all about the product and not about the price.
Kia is keen to get buyers to put their products on the shopping list of possible vehicles. One of the problems is that names like the Cerato are not well known.
What Meredith would like to do is rename the range with a number system. The very small Picanto (currently sold in New Zealand but not yet in Australia) would be called the K1, the Rio would be the K2 and the Cerato would be the K3. This is similar to makes like Mazda. In this way if a person is looking at a “3” sized vehicle then they will more readily know which Kia model to compare to the others.
Kia’s sponsorship of the Australian Open is an example of aiming for an up-market image. Although the sponsorship deal was initiated from Head Office in Korea, the Australian arm of Kia has embraced it warmly. Tennis is seen as an elegant sport and fits well with an image that the product is good quality and not just based on price. But Meredith admits that sponsoring the event is one thing, making contact with those who attend or watch on television is the next critical step.
Behind the scenes Kia is working hard with its dealers. Currently Kia dealers have one of the lowest number of sales per dealer in Australia. Another problem is multiple dealerships. On average, each Kia dealer is also selling five other brands of vehicle.
Kia has also tended to push sales at the end of the month to make up the numbers. “Pushing sales” generally means lowering prices.
Meredith now wants Kia’s approach to be more measured and sustainable.
As far as new product is concerned, the new Carnival is due this year. The Carnival is a well known product in the market and the new model has a more modern look for a people mover. The old model tended to look a bit cigar shaped; long and thin. The new model is more square and purposeful.
Unfortunately Kia will not be getting the equivalent of the Hyundai iLoad van or any utilities, a major component in the Australian market. Meredith thinks that it would make perfect sense for Kia to re-badge the iLoad, worldwide, but his doesn’t think this is going to happen.
Ultimately Kia is aiming for at least 5% of the Australian market. To do this they will have to shake of the old image and convince the public that their products put quality first.
