The Post-Recession Customer
A conversation with kia motors

Customers have changed dramatically in the last 36 months. JM&A Today talked to James Meyers, director of retail development at Kia Motors America about today’s customer and what’s important to them.

Q Recognizing that every customer is unique, they do share some traits. What do you see as the biggest differences between the average Kia customer during the economic boom times and the average Kia customer today?

A Kia is currently enjoying its own economic boom time. We’re selling more now than we ever have. Since 2008, our sales have really taken off: we’ve introduced 10 new models designed by our new design team. They have all been very successful. Two of them, the Optima and Sorrento, are made in the U.S. at our new plant in West Point, Georgia. Our focus for all of them has been design and high quality.

Our customer base has changed dramatically. Kia buyers now have a much higher household income and education, and they are younger than our customers in 2008. With what’s been going on in the market, people are willing to take a serious look at a brand like Kia. Retail sales increased 33 percent in 2010 and 54 percent in 2011. We’ve seen a great deal of strength in the Kia brand. We believe one reason for that is our partnership with JM&A. When we offer customers products such as extended service contracts, it shows the confidence we have in our products.

Q What’s driving their purchase decision today?

A Customers are looking for vehicles that provide a great deal of value for their money. There’s an interest in fuel economy—gas prices are not as high as they used to be, but not as low as everyone would like them to be. People want to know there’s a commitment to getting better fuel economy across the board. We introduced our first hybrid this year. Having that in our line-up puts us in a different league.

Along with fuel economy, customers are focused on quality vehicles that have the right features. If they have the right kind of design, that’s icing on the cake. I think we’ve done that with these new vehicles.

Q What do today’s customers want from a buying experience? Has that changed any from the boom times?

A For us, our customers now are better educated and have higher income and are younger, so they have more choices and options. By the time they come into the showroom, they are very well informed about the products they’re looking at. They have all kinds of information at their fingertips and they’ve spent a long time researching the product. They expect the dealerships to be fully knowledgeable about products and financing. They want a full range of options, including branded products and CPO, and they anticipate the highest customer service. They want to interact with a sales person who is also very knowledgeable about the product they’re selling and other products on the market. They want someone who can explain why the Kia products make the most sense. They want it all, and if they don’t get it, they will look elsewhere.

Q Do today’s customers seem to be making buying decisions
more quickly?

A We actually see customers making decisions more slowly. I think customers are much more pensive about automotive purchases. In the 2008 time frame, the attitude was ‘I’ll drive this car for a couple of years and get another one.’ Now, they look at this as more of a permanent decision. As a result of that, people are taking more time to decide to buy a car, so there is more pent-up demand. We think as more customers return to the market, we’ll return to a more normal buying pattern.

Q Is it more challenging to help customers with financing today than in the past?

A We’re finding it to be easier because our customer base has changed much more dramatically. They have much higher household incomes and credit scores. We’re getting much better support from our captive finance company. In 2008, they were only handling 11 percent of our leases. Now they’re handing 44 percent. Our residual values have increased significantly, which allows us to do leasing. JM&A helped us out with that; they conducted leasing seminars around the country. Many Kia dealers were relatively new to the world of leasing.

Q What about their trade-ins? Are they keeping their cars longer?

A Our average trade-in is seven years old. That’s one reason why we want to emphasize leasing because it is a way to get customers back into the dealership more often. The lease returns provide a supply of late-model vehicles for the certified program. That allows the dealership to have one more opportunity to make revenue. When there’s a chance to interact with the customer, it’s an opportunity to interact and impress them to come back to the Kia brand.

Q Are they making bigger down payments or just the bare
minimum?

A Down payments today are about the same as in 2008 proportionally. One major difference is that in 2008, we were offering much higher incentives in customer cash. That was often going to the down payment. We’ve reduced our spending from well above industry average in 2008 to well below industry average. That allows us to put more emphasis on leasing. We don’t need to offer as many incentives. That’s helped us with other products, like pre-paid maintenance contracts for leases that we’ve just added to the portfolio with JM&A.

Q Are customers more interested now in vehicle service contracts and pre-paid maintenance?

A Yes, because we have a different kind of customer. They have the ability to pay for it. Sales of our branded contracts have increased 103 percent. We’re dedicating resources to branded contract and certified pre-owned (CPO) penetration. We have identified CPO as one of the top five corporate initiatives for 2012. It ties into leasing.

Q It sounds like an extraordinary time in the life of your
company. Is there anything else exciting happening at Kia
Motors America?

A One of the most exciting things we’ve ever done as a company was our experience at the Los Angeles Auto Show. We had a great overview of the company and what’s going on. We introduced an all-new design for our auto show kit that’s similar to the new Image design for the dealerships. We’ve really put a focus on the design of our vehicles and we want design at the dealership to match that. We had Peter Schreyer, our chief designer, there. He was given an award for being 2012 Man of the Year by Automobile magazine for design contributions. We showed the Kia GT, which is just a stunning concept vehicle. It’s based on GT vehicles from 1970s, updated for today. It was a very exciting event for us.

Home  |  JM&A Today  | Contact Us