Kia dealer: 'We can sell everything that we can get'
Dealer since: 2001
Dealerships: Executive manager of the Kia Store, locations in Louisville, Ky. (2); Clarksville, Ind.; Elizabethtown, Ky.; and Gadsden and Anniston, Ala.
Average monthly sales at Kia dealerships in 2012: 375 new, 185 used
Quote: "Most of the models that Kia has are in very competitive groups, so we're seeing some of that and we're fighting harder to keep our share of voice and keep our market share. The climate is just more competitive now, and I think that's going to be the primary issue for 2013."
Despite a quiet year for new-product launches and some limited vehicle availability, Kia set another sales record in 2012.
This year, things will be tougher. A more competitive marketplace where bigger brands are spending more on incentives will put pressure on Kia to maintain its sales momentum and market share. Unlike last year, Kia will have plenty of new product to talk about, including the redesigned Forte compact going on sale soon, the Cadenza large sedan later this year and a re-engineered Sorento crossover.
Don Hobden, executive manager of six Kia dealerships in Kentucky, Alabama and Indiana and chairman of the Kia National Dealer Council, spoke with Staff Reporter Ryan Beene.
How was 2012 for Kia dealers?
I know the percentage of Kia dealers that were profitable rose dramatically. Within my 20 group, for at least half of them, it was a record profit year, ourselves included. We've had back-to-back-to-back record profit years. I'd say it was very, very good.
What major issues do Kia dealers face this year?
The first thing that everybody would note is that the market is a lot more competitive. What I mean by that is a lot more manufacturers are a lot more aggressive now than they were six months or a year ago. They're increasing their share of voice in an effort to increase market share.
Most of the models that Kia has are in very competitive groups, so we're seeing some of that and we're fighting harder to keep our share of voice and keep our market share. The climate is just more competitive now, and I think that's going to be the primary issue for 2013. For the last three years or more, Kia dealers have sold every bit of inventory they could get our hands on, and I don't expect that to change in 2013. But it's going to be difficult to improve share and sell the same number of cars or close to it that we did last year. We're going to have to be better operators, and Kia's going to have to come to the plate to help make us a little more competitive, and they usually do that.
As competition has toughened, how has Kia responded, and what needs to happen still?
Over the last three years they have been able to stay ahead of the curve with really innovative product that's based on great design. I think we have four product launches this year, and nothing moves the market more than a fresh, clean look that people want to drive. I think we've got more of that coming. We've got the new Forte, which is due out anytime. We've got the 2014 Sorento that's been redone and has some really nice enhancements. We've got the Cadenza coming out and the Forte Koup in the fall. In the last four years, especially since [Kia chief design officer] Peter Schreyer came on board, we've been a product-driven brand. So I think they'll continue that.
What about on the incentive front? Where is Kia positioned in terms of its incentive structure?
Up to this point I think they've done a good job of keeping up and actually staying a little bit ahead of that curve. It's probably time for them to analyze where they are and analyze what their goals are and give the dealer body the support that's needed in order to hold on to the share that we've gained over the last two or three years.
I'm confident that KMA doesn't want to give back one bit of that share any more than one dealer does. I think they'll continue to tweak things as they have in the past. Just a couple of months ago, 0 percent financing on the Sorento and Optima helped us a lot, and they've continued to do that on the Sorento, and that's helped us clear our 2013 inventory. The latest thing has been some of the 24-month lease programs and hopefully we'll get in the arena and compete with that. I've not had any conversations with anyone about that, but it's on my plate to present that.
Limited production capacity has been an issue for a while. Where do inventories stand, and how have dealers responded to the long period of lean inventories?
The inventories aren't so lean anymore. Slowly but surely, we have gotten just enough vehicles from Kia to increase our days supply. I think we're ready for a big sale event right now. I'm sure there are isolated places where a dealer could point to where they don't have enough, and that may be because they haven't turned it fast enough. In our case, I don't have all the inventory I want, but I have enough to go to war.
Kia sold a record number of new cars last year without launching any new products. What made that possible?
It was kind of a crazy year. I don't really know how to summarize it other than to say that we had really good momentum coming out of the fourth quarter of 2011. That momentum definitely carried into the first quarter last year.
There were no products launched, but I think KMA made the right decisions throughout the year with the incentive programs they had in place with the subvented rates.
I think the marketing department did a really good job. The ads, starting with the Super Bowl up through third quarter, were really just fantastic. I mean, they were ads that made people think about the brand, and at the tier-two and tier-three level we were able to capitalize on that and bring it into our own advertising a little bit. It raised awareness.
How do dealers feel about Kia's advertising?
I'll tell you this: The last three council meetings they've shown us the next ads, and they've gotten ovations from the 12 council members every time. I've not seen that in years past.
Are Kia dealers profitable?
Yes. I don't know the exact percentage, but I know that it's in the mid-80s. It's a great improvement of where it was a few years ago, and that's a number that keeps moving up.
What are some of the programs that have helped customer satisfaction and retention?
The core program is a OneCommand program, which uses e-mails, texts, voice mails to customers for service reminders. It's a very, very proactive and relatively low-cost tool that's available to dealers.
What's the average Kia dealer's fixed operations absorption rate?
My guess is that it's somewhere around 60 or 70 percent.
Is improving that a priority for 2013?
I can only speak for what I've seen over the last three years on dealer council, and it is a priority and a major talking point at council meetings. That filters from the council meetings, to the regions to the regional service managers. They're very hands-on and very involved.
How is Kia's Gallery image facility program progressing? Has it been well-received?
It's been well-received. We just had a regional conference call, and we were told that something like 22 dealers in the central region had already taken advantage of it. So my opinion is that it's pretty doggone good.
What do Kia dealers need from the factory to sell more cars?
Yes, we just need more cars. Over the last three years we've proven that we can sell everything that we can get, so the straight-up answer to your question is that we need more production, and I know everyone at KMA is acutely aware of that.
Have Kia's executives said anything to the dealer council about their production plans for 2013?
Nothing yet about any enhancements. We've been told at the regional level that production is going to be about the same in 2013. Availability -- the cars we get from Korea -- I don't expect much change in that number. That's why I said earlier that we're going to fight hard this year to protect our market share.