Fleet to the rescue for Kia
07 December 2021
Author: Sean Keywood
The brand says business sales have been crucial to its standing amid the continuing turbulence of 2021.
Strong fleet sales are helping Kia to meet its sales goals for 2021 despite the twin headwinds of Covid-19 and supply issues, the company has said.
Speaking at a media event, Kia's UK sales director Steve Hicks explained that it was on course to meet its overall targets for the year, despite having been 7,000 down on its expected sales at the end of Q1 following the winter lockdown and having faced the effects of the global semiconductor crisis.
He said: "If anything has helped us achieve our plans this year it has been the fleet market. The fleet market was the fastest to recover [from lockdown] back in April, and we were really thankful that fleet customers wanted to continue to buy from us and they have continued to do so.
"Our order pace has been incredibly strong in fleet, our market share is great in fleet right now, and it's exciting times after two years of the most challenging times."
Kia's head of fleet and remarketing John Hargreaves said that for the year-to-date the company had seen a 60/40 sales split in favour of fleet, compared with 48/52 usually, with nearly 50,000 fleet sales so far, giving it a 6.6% UK market share.
He said: "I think that's due to a variety of things. We have done very well managing the supply chain, so we've been less affected by product shortage than most people have.
"We've grown in all the fleet channels, and then the other thing is we have a mix of powertrains. We have overall a 70/30 ICE to eco [EV, plug-in hybrid and conventional hybrid] split, and in fleet it's 64/36, where obviously BIK advantages make the eco cars more attractive."
Hargreaves added that Kia had made sure its fleet success was not at the expense of taking a broad approach to the sector.
He said: "You don't want to be too successful in certain fleet channels. What I'm particularly proud of with the numbers that we've posted this year is that it hasn't been focused in particular channels - we've grown across the board.
"Our corporate share as we would call it is 6.7%, so it's very similar to our overall fleet share. We are doing controlled rental volume - we are doing some rental, but less than 2% of the volume that we do is rental that doesn't come back to us.
"Most of our rental is buy-back, and if you look at our total sales for the year into risk rental it's very, very small, so it gives us control over used car values."
Hargreaves further insisted that Kia would remain committed to fleet sales, despite the continuing industry-wide new vehicle supply challenges.
He said: "It looks like 2022 will be a year when supply is challenging. Having short supply is perhaps not a typical problem in the motor industry and it is a difficult one to get used to managing.
"We think we are in good shape relatively on that, and we are not intending to start pulling out of fleet channels as some manufacturers have done.
"We will scale back short-cycle business but we will certainly be maintaining a presence in it."
Hargreaves said that part of the reason for Kia's fleet success was the way its dealers were set up and incentivised to sell into the sector.
He said: "All the dealers are fleet-focused. Out of our approximately 190 dealers, 30 people are business specialists, where they are in an area you realistically expect to do local business sales.
"But we also have some level of expertise within all the dealers now. It's almost like a dealer standard that they have a business-literate person within the dealership.
"Also - not the same for all manufacturers - the units they sell count towards their target, so we have a dealer body that is motivated to do fleet properly."
As for Kia's product range, Hargreaves has high hopes for the new Sportage SUV (pictured), set to arrive early next year, with the outgoing model still Kia's biggest fleet seller so far in 2021.
He said: "The new one of course is an opportunity because it is coming with the different powertrains - we're going to have hybrid, plug-in hybrid - it will really open up new opportunities.
"Obviously another exciting model is EV6. Because of the [EV] BIK advantage we expect slightly more going into fleet than retail, but we are going to do that with limited to no financial support for that car - we believe that the quality of the product and its RV strength will mean we are not needing to really support
"We think the eco volumes will increase. It might go up to near-enough 50% of the total fleet volume, but again we are offering the full range of powertrains through the year. So, we think we're in a very good place for 2022."