| VIEW FROM THE TOP
DESIGN, TECHNOLOGY KEY TO SOUTH KOREAN OEM SUCCESS HORACIO CHÁVEZ Managing Director of Kia Motors México 44
Q: What alliances does Kia need to keep its sales momentum?
both buyers of new Kia cars and the brand to create a client
A: We have generated alliances with dealership groups,
base that will purchase a new vehicle after entering the Kia
financing and insurance companies, promoting our vehicles
family with a used unit. Since its launch, Kia has expanded this
among them and receiving a rather good response. For
program to a network of 17 Konfidence showrooms, plus eight
instance, our alliance with Cetelem, formerly BNP Paribas,
more in 2019. Most of the vehicles that we sell are certified
is key because it acts as Kia’s financial branch in Mexico.
before reaching the showroom, which helps us maintain
Together, we have developed a robust vehicle financing option
warranties on used cars.
for customers. Our financial product lineup is innovative and attracts interest from potential car buyers, which has helped
Only 35 percent of all cars sold in these showrooms are Kia
Kia Finance earn a solid share in the Mexican car-loan market.
because there are few Kia customers that have concluded their repurchase cycle, which in Mexico lasts five years. The
Q: What are the main factors behind the success of South
first 11,000 units that Kia sold in Mexico upon entering the
Korean OEMs in the Mexican market?
country in 2015 are reaching the end of their repurchase cycle
A: Kia cars are associated with eye-catching designs and
and customers are only now starting to change their current
for coming equipped with plenty of safety and connectivity
Kia for newer models.
equipment. We were a completely unknown brand when we entered the country, so we focused on generating the trust
Q: How has the Mexican market reacted to Kia’s hybrid lineup
factor among consumers, which entailed developing some of
and what challenges do green vehicles face?
the largest showrooms in Mexico to avoid being perceived as
A: Price is the main challenge these vehicles face to become
a small brand. We also offer warranties that cover seven years
more commonplace, but economies of scale will make green
of use or 150,000km to convey that Kia is a quality brand. This
cars more affordable eventually. Kia’s hybrid Niro has achieved
was our main letter of presentation to Mexican car buyers.
our expected sales of around 80 units per month. This SUV
Kia also offers the lowest maintenance costs in the Mexican
is attractive to Mexican consumers because of the great
market, which is decisive for customers who are looking for
mileage it offers. We are analyzing the introduction of more
a new car. Kia has also implemented a significant marketing
green vehicles from Kia’s global lineup to Mexico that could
campaign to communicate that it is a vibrant, quality brand.
fit the Mexican market with the goal of expanding our hybrid and EV lineup. This is, however, not an immediate option. It
Q: How has the Mexican market reacted to Kia’s Konfidence
is still difficult to acquire an EV in Mexico and even harder to
program for pre-owned vehicles since its launch in 2017?
drive it over long distances. For us, the future are the hybrids
A: This program was launched too early and no customers
that offer full autonomy and have great fuel efficiency while
wanted to trade in their car to acquire a new Kia model.
reducing polluting emissions.
However, it was a good way for us to understand and prepare for Mexico’s pre-owned vehicles market. This program is
Q: What are the most important factors hampering the
intended to generate a solid resell value for Kia cars in the
recovery of the Mexican vehicle market?
Mexican market. Not only do we earn a solid gross profit
A: There is still some level of uncertainty despite the Consumer
margin on each used car sold but this program also benefits
Confidence Index showing positive results. These levels of consumer confidence are not reflected in the pockets of buyers. Interest rates also are high. We are also missing the
Kia Motors is a South Korean OEM that entered the Mexican
influx of private investment and the government has reduced
market in 2015 and in 2016 began its local production in the
public expenditure. We hope to see a market reactivation that
municipality of Pesqueria, Nuevo Leon. In only three years, the
can help the Mexican vehicle market to recover from the steep
brand became the fifth-largest seller in the country
sales drop it has experienced.
