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