Cookies on Businesscar

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. However, if you would like to, you can change your cookies at any time

granitekitchen magazine website email Awards mobile

The start point for the best source of fleet information

Slowly does it as Kia moves into position to overtake fleet rivals

Date: 08 May 2015   |   Author:

Kia's rise to mainstream success in the UK automotive market has been speedy, with volumes increasing from 33,419 units a decade ago to an expected 80,000 this year.

This massive 139.4% rise in sales over 10 years has been built on a bit of luck (the scrappage scheme in 2009, take a bow), but also on the eye-catching design and quality of its products, as well as the introduction of a headline-grabbing seven-year warranty.

While fleet has played a part in that growth, retail customers have always represented the majority of the brand's volume.

John Hargreaves joined Kia as head of fleet and remarketing after the effect of the scrappage scheme had settled down and the Korean brand was firmly registered as a mainstream competitor.

He has been quietly boosting Kia's fleet market share since his arrival, from 1.6% at the start of 2011 to closer to 3% in 2014. It's his task to increase fleet to 4% as part of Kia's plans to sell 100,000 cars in the UK a year.

Hargreaves joined Kia from Motability where he was manufacturer account manager. He had spent 16 years before that with Citroen as national fleet sales manager.

As Hargreaves explains, Kia will likely always be a retail-biased business, but he knows that in order to reach 100,000, the brand will tip further towards corporate business.

The overall UK average market share between fleet and retail across all manufacturers year-to-date, according to Society of Motor Manufacturers and Traders, is 53% verses 47%. Kia's current sales mix flips that on its head with 52% of its sales going to private buyers and 48% heading to fleet.

If Kia is looking to hit 80,000 units this year, that would track the brand for an 11% increase in fleet sales to 38,400 units - greater than last year's 4.4% increase to 34,575 units.

Hargreaves says: "We have balanced towards mirroring the market more. We will always want to have a slight retail bias, as it is a more profitable route to market.

"Having said that, with fleet being over half the market, we're well aware that we can't get to the numbers we want to get to without having a strong fleet presence as well. It wouldn't be practical to think otherwise."

The rise this year will come from Kia increasing business in all segments of the market, rather than forcing registrations through Motability or daily rental. The brand put a 10% threshold in place in terms of the amount of daily rental business it will do as a total percentage of its UK volumes.

This would mean Kia could put 8000 cars through short-cycle business this year, but Hargreaves says the company did less than 10% last year and the same could happen
again in 2015.

Kia was in 13th place in terms of UK fleet sales last year, according to stats from the SMMT, but Hargreaves isn't aiming for an arbitrary top 10 position this year. There will be growth, but breaking into the top 10 will be a by-product of slow and steady expansion, rather than being a set objective.

Hargreaves says: "There are things that we could do to rise up the ranks very quickly, but we don't want to do it.

"You look at our numbers and there are some products which are somewhat supply constrained. When you're in that position, you would be foolish to push for more volume and dispose of cars non-profitably, just to gain a particular position in the market."

Does that make it difficult to compete on large-scale deals?

Hargreaves says Kia has competed on big fleet deals "fairly aggressively and successfully", particularly on public sector bulk purchases last year. However, it is only interested in being profitable.

"We're not in a position where we have to force the market," he tells granitekitchen. "If you look at some of the actions taken in the first quarter of this year with our competitors, there has been some incredibly distressed marketing activities, which we just don't have to do.

"We want to do large fleet business, but we'll only do it if it doesn't embarrass us financially and gets us in the wrong position with residual values."

Large corporate business and SMEs are where Kia will be getting the majority of its growth in fleet from this year.

Dealers ready for fleet

Hargreaves highlighted Kia's dealer network of 184 showrooms as a key component in increasing its fleet sales to SMEs.

The firm has a permanent fleet sales team of 10 working on promoting the brand to companies across the country, but Hargreaves says the UK network is also brought in to boost the brand's strength with local companies.

One reason is because Kia actually counts corporate sales towards a dealer's bonus. It's something it has always done in order to encourage dealers into the market, which is notoriously difficult to do. Dealers often see fleet as a low-profit opportunity due to the level of discounting expected.

All 184 UK dealers are on board with creating closer ties with local businesses, although within the dealerships Kia also has a network of 25 fleet specialists. The dedicated sales staff have access to their own demonstrator fleet, and are incentivised beyond the traditional bonus to deliver higher levels of corporate sales activity.

Hargreaves says: "We will expand those fleet specialists to 30, maximum, and that will give us a decent amount of coverage across the UK for driving that SME business."

Alternative fuel strategy

Kia launched its first electric vehicle, the Soul EV, last November. It was a toe in the water for a zero-emissions vehicle and Kia always knew it wouldn't do more than 200 units in the UK. There are no current plans to put an electric powertrain into another Kia model.

However, Kia does have plans to introduce hybrid versions of its Optima over the next two years. The first will be the Optima diesel-hybrid, which will arrive next summer, while a plug-in version will follow in 2017. Emissions outputs have not been confirmed for the Optima hybrids, but sub-100g/km is likely for the first one.

John Hargreaves, head of fleet and remarketing at Kia, says: "We are also keen on smaller petrol engines. There will be a 1.0-litre turbo Ceed later this year and we're also going to be looking to roll that engine out across our range.

"We're not pinning our colours just to electric vehicles - we're looking at everything. Diesel, petrol, hybrid, plug-in hybrid; it's a broad brush approach."

Fleet aftersales

Kia hasn't had a specific fleet aftersales service charter before and Hargreaves says it hasn't reflected on the brand poorly because it is already looking after customers well.

However, he thinks the business is now at the stage where it ought to shout about what it can offer to fleets, and has launched its own set of promises, with 90% of the dealer network signed up to it. Part of the charter includes a standardised regional labour rate and a high level of service for customers.

Hargreaves says: "It's not offering something you wouldn't expect, but it's offering standardised pricing and a certain level of service. It just lays out everything we can do for fleet customers."

The core fleet models

Kia has built its fleet strategy around the Sportage small SUV and lower medium Ceed, and that will be how it will continue for the foreseeable future.

Hargreaves says the Sportage, which will be replaced early next year, is still selling well even though it is in its fifth year. It leads Kia's fleet sales and holds 30th position in the most popular fleet models in the UK with 12,053 units, just behind the Renault Clio.

He says: "We're not putting a lot of marketing money behind the Sportage but it's still such a desirable product.

"Residual values. are extremely strong and the current model will maintain its top 30 position this year."
The Ceed took 46th place in the top 50 fleet sales charts last year and Hargreaves says that while there is the opportunity to increase volumes, Kia won't be pushing it artificially to bump it up the sales table.
One area limiting Kia's growth in fleet is its access to certain products that have limits on supply. It means you're unlikely to see models such as the Picanto or Rio entering the fleet top 50.

Where Kia can grow will be in the upper medium segment with the new Optima next year. Hargreaves admits supply will be constrained due to the model's historic success in the US, but if Kia can get hold of enough supply, we could see also more Optimas run by UK company car drivers.

Hargreaves says: "The US eats up a huge amount of Optima production, where the brand sells 12,000 a month. The first year the Optima went on sale here, the model was earmarked to sell 1000 in 12 months.
"So the argument for more volume heading to the UK is a difficult one, particularly when the market for mainstream upper medium models has diminished."

Hargreaves couldn't confirm CO2 figures for the new car, but did say it would be greatly improved on the current low of 128g/km. Kia has also confirmed a diesel hybrid version will come to the UK in the middle of 2016 while a plug-in model will arrive a year later (see 'Alternative fuel strategy')

Another factor that could transform the brand's reliance on the Sportage and Ceed for its fleet business would be a potential estate version of the Optima. Kia showed off the Sportspace at March's Geneva motor show and while there are no official plans for production, it has been strongly hinted that it will arrive in the UK.

Kia's view of the upper medium market is that there is a 60/40 split in favour of estate models for mainstream brands, so an estate is essential to compete.

"If we do broaden the range a bit, I would expect an estate would do quite well for us," says Hargreaves.
Another gap in the line-up is a small crossover to rival the Nissan Juke, but there are already concepts such as the Niro that could make it to the UK. Hargreaves, however, rules out the possibility of a large executive saloon being sold here.

Kia has had a traditional strength with businesses looking for cost-effective transport, and this is
where models such as the Ceed Sportswagon has performed well, according to Hargreaves.

He says: "We want to continue offering cars that appeal to the head, but we also want to be more successful in fleets where the driver has a fairly free choice. The Sportage has helped us with that."
The firm's fleet team has a "relentless" visit schedule with companies to promote its offering, which is all done with a modest demonstrator fleet of between 70 and 90 cars.

"Our demo fleet is small compared with manufacturers that are doing the amount of sales we are doing," says Hargreaves.  

"All of our fleet activity is done as cost-effectively as possible and the demonstrator fleet is another example of that. We don't want a large fleet of cars that aren't being used and we don't want to use it as a registrations exercise."

Residual values

Residual value management comes under the remit of John Hargreaves, Kia's fleet and remarketing boss, and he says it's a real strength for the brand's fleet business. He believes the seven-year warranty has been a good RV protector because it passes on peace of mind to used customers. Kia also offers to top up its warranty back to seven years as part of its approved used car programme.

Hargreaves says: "We have a very open relationship with the key [RV] guides. We feed them all our sales data. We are in the fortunate position with the amount of rental cars we do: we do over 80% of them on buy-back, so we're controlling the values on those cars."

He continues: "When we sell rental cars on the used market, almost every single car goes back into our dealer network. The guides are aware we're not having to distress used cars on the open market at six months old, and that's reflected in the RVs. We run a monthly comparison against a basket of competitors and in most categories, we are very highly placed against the competition. It is because we're not doing a large amount of short-cycle business."



Share


Subscribe


https://seotexts.com

подробно chemtest.com.ua

В интеренете нашел важный web-сайт с информацией про www.progressive.ua.