For a brand that is barely 14 months in the Indian market, Kia has firmly stamped its presence with only three products — the Seltos midsized SUV, Carnival MPV and more recently, the Sonet compact SUV.
Kia Motors India’s Vice-President and Head, Sales and Marketing, Manohar Bhat speaks about what has made the Korean car manufacturer tick in this part of the world amidst stiff competition.
Kia Motors India (KMI) has topped the FADA Dealer Support Satisfaction Survey. What are the key support measures undertaken by the company in view of the pandemic?
Kia Motors India has always worked towards the wellbeing of its dealers, their staff and ensured that there is no business pressure on them. The Covid-19 pandemic posed challenges for lives and businesses alike and it was crucial for us to stand by our partners in these tough times. In order to support our dealers, we introduced initiatives which not only supported their financial health but also encouraged their employees to perform better. Some of these support schemes are as follows:
- Fifty percent support on inventory funding: Inventory funding is the credit taken by dealers from banks to order new cars. From ordering until these cars get sold, dealers have to pay an interest on this loan amount. To decrease this financial burden, we extended financial support by offering to pay half of the inventory funding amount to our dealers.
- Pending deposit refund: Furthermore, the security deposit kept by dealers with OEMs when they are officially appointed was also immediately refunded to ensure we increased liquidity in their systems.
- Manpower incentive: Every dealer employee has a variable income remunerated upon completion of their monthly targets. To encourage the employees at the dealer level, KMI announced it would pay the variables on behalf of its dealers.
- Warranty claims and payments: All the approved service claims for warranty were credited to the dealers' account on priority against the dealer invoices within 15 days of announcement of the nationwide lockdown in March 2020.
KMI was amongst the first to adopt a digital-retail strategy. Has it proved to be a sales enabler and how are your dealer partners coping with the shift?
Kia has always planned and designed all its products and services keeping the customers at the heart of everything. We understand that our young-at-heart, dynamic customer base is also technology savvy and hence, we have invested in the digitalisation of the sales process since the beginning of our journey in India last year. Our end-to-end online sales process offers all kinds of solutions based on a customer’s car buying requirements — right from finance to insurance and now extending it to home delivery of new vehicles to provide a seamless ownership experience. It also enables our customers to get information about our products remotely.
Digitalisation is inevitable and businesses cannot ignore it in today’s tech-savvy world. With the launch of our first vehicle, the Seltos, we empowered our customers with digital services and made the car buying process easy and convenient. This has certainly proven to be an enabler and our timely preparedness also helped us and our customers during the pandemic where people were avoiding physical contact. Though digitalisation of the car buying process is in its nascent stages in India, surprisingly our dealer employees left no stone unturned to quickly adapt to this new normal.
What are some of the key learnings from your digital strategy? Has KMI also shifted to conducting dealer sales and service trainings online in the present scenario?
Our key learning from our digital journey so far is that we will see more customers moving towards contactless buying and we expect to witness the evolution of online sales, coupled with customer visits to the showrooms.
The future of car buying will be a close conjunction between online and brick-and-mortar outlets, thereby calling for a‘phygital’ approach. Currently, to avoid any risk to our employees, partners and eventually customers, we are conducting all sales and service trainings online.
Inventory pile-up has been one of the major concerns of automobile dealers across OEMs. Has Kia Motors devised a new strategy after the lockdown to rationalise dealer stocks?
At Kia, we believe in a sustainable growth approach for ourselves and our dealer partners. During the lockdown, we reiterated this approach by introducing the Order to Delivery (OTD) system. As per this new SoP, our production is directly linked to the demand from our dealer partners. This process is the need of the hour which rationalises dealer stocks and eventually reduces the financial burden upon them.
What is the current count of KMI showrooms and are you progressing with your expansion strategy for FY2021 even in the current time?
We are currently operating with 265 touchpoints across 165 cities in India which include Tier 3 and Tier 4 markets like Hisar, Haldwani and Rohtak. As committed earlier, we will never shy away from offering our customers the best of products and services and hence we are constantly working towards increasing our network strength. By the end of this calendar year, we plan to increase the number of touchpoints to 300. We also have mobile service vans that help us reach customers in places where we do not presently have a showroom. Mobile service vans increase our reach and help us connect with more and more customers from all parts of the country.
Having introduced the Sonet compact SUV, is Kia optimistic of a good festive season? What is the latest update on its bookings and which variants are garnering maximum demand?
Since our inception in India, we have observed that there is always demand for a feature-rich and high-quality product. The initial success of the Sonet, which clocked 9,266 units in just 12 days of launch, is a testament of this fact (the Sonet clocked 9,266 sales in September 2020).
Similar to the Seltos, we are witnessing encouraging demand for the compact crossover across India and we trust that the festive season will further boost the demand for our latest product in India. Till now, we have received almost 35,000 bookings for the Sonet; hence, with this high level of bookings, the leftover stocks at the dealerships will be minimal. We are receiving huge demand for the top-end variants but it is the mid-variants which are gaining popularity with almost 45-50 percent of bookings coming from the K+ and X trims across the Tech and GT Line offerings, respectively.
With 18,676 units in September, KMI contributed 7 percent to Kia Motor Corporation’s global volumes. What is the company’s general strategy to leverage capacity and what is the export strategy for the new Sonet?
In line with India’s unlocking policies, we have started second shift operations at our manufacturing unit in Anantapur, Andhra Pradesh. With growing demand in the domestic as well as export markets, we are confident to achieve full capacity utilisation at our 300,000-unit plant by 2022.
Coming specifically to the Sonet, it is an exclusively manufactured-in-India product which will be exported to markets like Indonesia and South Africa and with this, we are now starting to establish India as an export hub. We are targeting exports of 50,000 units in the first 12 months to over 70 countries in regions such as the Middle East, Latin America and South East Asia.
Even in difficult times, the Seltos remains one of the top-selling UVs in India and sold 9,079 units in September 2020.
The Seltos’ continued success, even during the lockdown, is a result of our extensive research on the Indian market. The Seltos is a consumer-insight driven product and packed with all the necessary features tailor-made for India, keeping all the unmet needs and demands in mind. In addition to this, various customer-centric initiatives like our-end-to-end online buying process, Smart Collect and Kia Care campaign have further propelled the growth momentum of the Seltos. The success story can also be hugely attributed to the focused communication and marketing strategy that we have followed for the brand. We entered India with launch of our first brand campaign, which received an overwhelming response from the Indian audience.
At 12.79 percent UV market share, Kia Motors India is the No. 4 player in the overall list of 16 UV makers across the country. Together with Hyundai Motor India, the UV share stands at 37 percent. Do you think by end-2021, Hyundai-Kia will have a combined UV market share of 50 percent?
As of now, we are focused to fully utilise our plant capacity by 2022. Observing the ongoing situation worldwide, I would like to restrict myself to comment on future market share. However, I can commit to our Indian consumers that Kia will always bring best-in-class vehicles at competitive pricing.
This interview was first published in Autocar Professional's October 15, 2020