Few manufacturers came out of the European recession in a strong position, Kia being a notable exception. Since then the company has continued to grow across Europe. The brand looks set to increase sales by 9% in 2015 and expects to see

European sales, excluding Russia, reach 385,000 by the end of the year. This would mean that the company would have increased sales by 50% in five years, while European sales for all manufacturers would have recovered to the same level as in 2010.

The revised cee’d, designed in Europe and built at Kia’s plant at Zilina in Slovakia alongside the Venga and Sportage went on sale across Europe in July (see test on p.44). This will be followed by more new product next year, including the new Sportage, which made its debut at the IAA Frankfurt show in September.

A new Optima will also join it and there will be plug‐in hybrid and micro hybrid models to come, now that Kia has also launched its turbocharged 1.0‐litre petrol engine in the revised cee’d, a compact power unit well suited to hybrid power trains.

Retail mix

Most of Kia’s European business has been with retail customers but as the company matures and sales continue to rise, fleet business will make a greater contribution. Kia’s current sales performance means that 2015 marks seven consecutive years of growth.

“Our growth in the last two years has been more in line with the market, having exceeded market performance previously,” says Michael Cole, Kia Motors Europe chief operating officer (COO), “And that’s very much around product cycle changes. The key thing is that it has been sustainable growth with good quality of business. We may have been a supply pushed brand 10 years ago, but we’re now a demand pull, so we work off customer demand.”

This brings us to Kia’s European fleet/retail mix.

That currently stands at around 62% private sales and 38% fleet, which is more retail orientated than the market average. Cole reckons that to be around 53% fleet and 47% retail. “Actually that includes some of the premium brands so if you took the real volume competitors, we might be on a 40/60 split, retail/fleet. So we are still very much focused on our sales in the retail channel, but that actually give us an opportunity.

“We’ve already announced that we want to get to 500,000 sales in Europe and we think we can do that before the end of this decade. Of course we’re going to need new product and we have plenty of that coming. When I look at how those 500,000 units will come, you can look at it in terms of product and ask: ‘How many would be Sportage, how many Rio, how many Picanto, how many cee’d and how many new products?’ The other way I like to look at it is the channels and ask, ‘If we are going to sell 500,000, who is going to buy those cars?’”

Fleet sales growth

Cole is in no doubt that the current 62/38 retail/fleet mix will change, which almost inevitably means a greater proportion of fleet sales. “We will grow our

private sales, I’m convinced of that,” says Cole. “We have a great opportunity to continue to win conquest sales in both the retail and fleet sectors with buyers

who become aware of the brand, but we also have a great opportunity for retention.

“That will drive private growth, but we know we need to have a stronger presence in the fleet market.

Given some of the products that we know are coming in the next 18 months, we’re now building our plans around strengthening our fleet operations in the European market. Some of that is work in progress.”

Some of this involves working with Kia’s importers and national sales companies in Europe to identify how fleet business can be grown in different markets.

“I will take the UK as an example,” says Cole. “The UK with Kia has an established fleet operation. It has been built over the last five or six years where we started out with creating a business centre strategy.

Actually, we say every dealer can sell fleet. We want all our dealer network to be able to sell fleet, particularly to be responsive to user‐chooser type business because those customers will come in and just like a retail customer, will want to drive a car and ultimately may want to go through to a quotation, then be given the recommended leasing company.

Proactive business

“We also recognise that we need to have a more proactive side to our fleet business, because of the local business opportunity, where everyone wants to be because it is more profitable. So in the UK we created this business centre strategy where we supported the dealers, initially with some sort of marketing and head count support. As time goes on you can start to withdraw as the dealer becomes more self‐sufficient because they start to grow their sales volume. Mark Howell, our fleet sales manager in Europe, and I are looking at how we use the UK as the template when we are talking to other markets in terms of what they need to do with their dealer network structure.”

This involves asking, “Who can sell fleet? What do they need to sell fleet?” That includes what they need in terms of dedicated resources including a demonstrator fleet and whether that should be centralised or not. On that basis what are the elements that Cole thinks you need to have to be active in the fleet market?

White label fleet products

“In each of our markets, we are already working with ‘white label’ partners. We use ALD and Arval primarily as our partners to offer white label, Kia‐branded fleet products. The reason we are doing that now is because we look at the product that is coming in the next 18 months that will give us an added opportunity in the fleet market.

“If I talk about the D‐segment, which is always primarily a fleet market, we are launching new Optima around the turn of the year and we are looking at the opportunity based on the Sportspace concept from Geneva this year. There’s no official announcement yet but we will see if there is an opportunity in terms of D‐segment wagon. Then there are new products and we are looking at hybrid technology to suit the fleet customer. So there will be more product offering a broader product range that we think will meet fleet demand, so we have to find a way of taking that to market.”

Cole acknowledges that all manufacturers want to operate in the profitable local business user market, but he is clear that Kia wants to work on all the fleet channels.

Rental growth?

“We’ve been a relatively small player even in the rental market. Of course we’re talking to all the major rental partners regularly and in some markets we have a stronger presence than in others. Again it’s a question of how we do that in a proactive rather than a reactive way.” As Cole explains, he thinks that sometimes

manufacturers go into the rental market because they need to shift volume. “One of the things we need to do is to get people exposed to the Kia brand, because we know that the product we have will exceed so many peoples’ expectations. If you do it in the right way, a controlled way and you have a re‐marketing channel, you can use the rental market very well. Talking particularly about the Optima launch, we’re looking at how we can put vehicles into the rental market to get exposure for the product and get people to drive it.”

Kia is experiencing demand for used models from its dealer network across Europe. “As the new vehicle volumes grow, there’s always a lag for the used vehicle parc,” says Cole. “It’s an opportunity particularly when you have a seven‐year warranty. If you’re talking ex‐rental you could be talking six‐month old cars, but whether it be cars coming off leasing contracts after three or four years, for us, subject to mileage they could still have three or four years of warranty.”

Kia launched a European re‐marketing programme last year to support its fleet business and will launch it across Europe. “We know that if we’ve got the right remarketing channel, we can then go into the fleet business confidently knowing that when those cars have been de‐fleeted, whether that is six‐month rentals, or three‐year fleet leasing, you’ve then got a re‐marketing channel. Because we haven’t had such a large number of vehicles being de‐fleeted they have strong residual values and we believe that if we continue this sustainable growth strategy, growing fleet will still give us the opportunity to have strong residual values, which is obviously not only of benefit to the consumer, but also then gives a very strong used car opportunity.

“We would look at a fleet opportunity in every market. We have a good fleet presence in Poland for example and we do good business. Every market has a fleet opportunity. It will vary but we know there are some big markets there and one of them is Germany.

"We see France and Germany as big opportunities.”