Kia Celebrating Its Success as It Launches 2012 Rio and Soul
In the last three years, including the 2012 Kia Rio and Kia Soul, the company has launched nine new vehicles in what is rightly described as a down economy. Tom Loveless, vice president of sales, did his best Mitt Romney imitation when he declared, “Unemployment is dangerously high and stays there. It is well above traditional levels and consumer spending is anemic.”
But, Americans are still buying new cars and they’re buying Kias. The company has enjoyed 13 straight months of record sales. Overall, sales are up 37 percent for 2011, which is 3.5 times better than the industry, according to Loveless.
Since 2008, during some of the industry’s most harrowing times, Kia has done well. Its sales are up 61 percent in three years. Its Korean counterpart Hyundai is second at 46 percent, followed by Subaru at 36 percent, Volkswagen at 34 percent, Buick at 24 percent, and Ford at 14 percent.
Sales of new vehicles are expected to be 12.5 million based on Kia projections with 2012 expected to rise by a million new vehicles to 13.5 million. Kia’s share of that market is currently 3.9 percent, which is up almost 25 percent from its 2010 share of 3.1 percent. It is the company’s 17th consecutive year of market share increase.
It’s important to grow market share in what the industry calls the B segment, but the public knows as sub-compacts. By 2015 that segment will grow to 725,000 vehicles from its current perch of about 400,000 sales in 2011. It will be the sixth largest segment in the market. “Sub-compact offers the next best opportunity for us as a brand,” Loveless said.
Wondering where Kia’s new customers are coming from? As Loveless said, “the key donor brands” are GM and Ford. Michael Sprague, vice president of marketing and communications, said Ford is the number one cross-shopped brand for Kia, followed by Toyota and Honda.
Kia buyers, in a good sign, are also younger than the industry average. Sprague told the gathered media that the industry average is 49 while Kia is averaging 47 so far in 2011. Not only are its buyers younger, they are also becoming more affluent. Average household income (HHI) was $51,431 in 2007. That number has sky rocketed to $63,665 in 2011 (in a down economy).
The brand’s growth is coming about, Loveless said, “because in the end it’s about how the market perceives your value.” In other words, value may be the new cool, as he puts it, but an inexpensive car that’s a cheap car is going to languish on the dealer lots.
The dealers are feeling the love obviously. Loveless said the number of new vehicles sold per month at Kia dealerships increased from 25 in 2008 to 50 per month in 2011. In a separate report, AutoRemarketing.com reported that Kia had its third straight month of record certified pre-owned sales with 977 units sold.
Three years from now those certified pre-owned vehicles are going to be more expensive thanks to improvements in residual values. Kia’s 2012 models have an average of 55 percent, which is almost double what the numbers were three years ago. Sprague said Kia also has strong customer loyalty with 44 percent of its owners trading in an old Kia for a new one vs. an industry average of 40 percent.