Tuesday 24 October 2017

My 'Korea' move raised more than a few eyebrows

Collegues thought he'd joined a certain Swedish firm on finding out about move to Korean rivals Kia, says Eddie Cunningham

Eddie Cunningham

Eddie Cunningham

WHEN James Brooks told Opel he was leaving to work for Kia, a colleague rounded on him: "What do you know about furniture?"

Even in the motor trade just eight years ago, IKEA came to mind quicker than Kia.

By the time Mr Brooks arrived at the wholly-owned Kia subsidiary in 2005, two years had already been devoted to improving on a poor reputation for, and limited perception of, its cars.

That makes 2013 the 10th year the company – as it is currently constituted – has been selling the motors here.

It is an important juncture for the brand which shares its South Korean automotive stable with big-brother Hyundai.

Things have changed so much in 10 years. Kia and, for that matter, IKEA have arrived.

That IKEA 'soundbite' resonates with relevance.

Those of us who tested the old Kias would have delighted in comparing them to mobile pieces of furniture.

Two private distributors had attempted in vain to establish the brand before the marque itself took things in hand in 2003 and in 2005, Mr Brooks, its current managing director, arrived. "We got 1pc of the market (1,700 cars) that year," he said.

The intervening years have been both kind and unkind to the marque.

Kind in that its steady climb up the sales and market-share league coincided with both a flood of its thoroughly modern motors and the buying boom. Unkind in how the market has nosedived. Kia's market share has, since the recession hit, risen in tandem with some award-winning models. Unfortunately, the overall number of cars sold does limited justice to the investment and effort exerted.

Mr Brooks and his team don't necessarily see it like that. They concede it has been tough on everyone but argue that if they hadn't the cars they now have it could have been a lot worse.

Glass half full.

"At least we have certainty," Mr Brooks says. "We are part of the fourth largest car company in the world – Hyundai is the big brother in the stable."

There are no illusions, however. The benchmark to get this far has been Toyota's build quality and design is the new imperative in a global market.

"People want cars that look really well. It is the first big impression. If you don't get that, you don't sell."

Mr Brooks sees his cars as "mobile billboards" – as opposed to the mobile wardrobes of 10 years ago.

They've sold a lot of billboards. They will hit 4.7pc/4.8pc market share this year – 3,350 vehicles in a total market of less than 70,000. Even rivals acknowledge the achievement.

How much of the gain has been down to the attraction of the now famous seven-year warranty?

It has played a big role at a time of great uncertainty, Mr Brooks agrees.

However, he argues that if you give a warranty but don't have the cars to withstand the test of time, it will cost you dearly.

So first you've got to make sure your cars justify the faith and the backing.

By the same token it was a huge marketing coup in 2006 when they introduced it with the small, family Cee'd. "Then we expanded it with the Sportage (crossover) in 2008."

And by 2010 they underpinned all their motors with it.

"Children whose family bought a Kia when they started secondary school will be well into college before the warranty runs out," Mr Brooks smiles. "That is an amazing thing."

One disadvantage as far as their total sales numbers are concerned is they don't sell too many to the company fleet market.

Hire-drive accounts for 10pc but, for now, the emphasis is heavily on family buyers. Therefore, repeat business is crucial (and apparently materialising) but conquests from other marques are essential to increase market share. "It's primarily a conquest business. Buyers are so well informed.

"They know what they want and they know what is out there."

They have 31 dealers and reckon it is enough to meet the demands of a difficult market.

Then the 'sneaky' question: how do you get on with sister company Hyundai here? There must be family feuds within the confines of such a small marketplace?

Mr Brooks is frank about it. "Of course we compete with each other but that is part of the plan. Having the two brands competing means the sum of the parts is greater than if just the one was in there."

Between the two of them they account for 12-13pc of the market. "That's one in every eight cars sold here. The big guys are nervous of us." He is adamant: "But it's not about where we're from any more. It's like Samsung. They just are global. So is our group."

It wasn't always thus. When this little-known maker came into the Irish market the emphasis was on cheap. Now, like Skoda, it has to carve out a place where purchase is based on value and not strictly price. It's a tough time to be doing it, but that seven-year warranty helps. No one is in doubt about that. Even if you buy a second-hand Kia, you get the benefit of whatever length of warranty is left on it.

Trade-in values, consequently, are high. That is a big thing for families who put so much of their own money into their cars – their equity is protected.

Mr Brooks is frank about the business.

"Yes, it is tough out there. A few years back our 4.8pc share would have had us in eighth place. Now there are so many around that level it only gets you 10th or 11th. We (in Ireland) are not that worried about market share.

"We are, of course, judged on volume sales but big corporations like Kia also want market share."

He sees the total market getting back above 100,000 new-car sales as a barometer of the economy returning to robust health. "But it is a little way off yet. We are currently languishing on a hopefully projected 70,000."

Next year? "Possibly 72,000 unless we get some sort of swappage scheme (where middle-aged cars get a VRT rebate)."

There are no guarantees on anything out there now. But you can bet on Kia not joining the rush to plug into selling electric cars – "I don't see them at all. Never have."

The formula, for now, is simple.

Good, smart-looking cars and seven-year warranties.

That's what the buyers want.

And knowing your business is knowing what your buyers want.

As any good Kia, or IKEA, sales person will tell you.

Irish Independent

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