The 2021 Sorento, which had a starring role in New York’s pandemic-altered New Year’s Eve celebration in Times Square, is only the latest piece of a broad blitz of new product for Kia.
There’s also the upcoming Carnival, which aims to blur the lines between a minivan and SUV, and the K5 sedan introduced last year. And all of those ride on the coattails of the Telluride’s arrival in 2019.
The Telluride was “the most successful product launch I’ve ever seen in my 23 years in the car business,” James Morrell, chairman of the Kia Dealer Advisory Council. He and other Kia dealers hope to have more reasons to celebrate after this year’s debuts.
Morrell, 47, spoke with Staff Reporter Vince Bond Jr. about Kia’s product offensive and how the brand has helped dealers get through the pandemic. Here are edited excerpts.
Q: How has Kia helped dealerships navigate the changes brought about by the pandemic?
A: When the pandemic first started, Kia was great as far as working with the dealer council to put a lot of measures in place for the dealerships to be able to survive the initial onslaught of the pandemic. They advanced advertising money, so we had additional cash. They deferred for planned payments. They held cars. They renegotiated contracts with vendors to reduce the expense for dealerships. So they did a lot of things right away to put dealers in a better position to come out of it strong.
The other thing they did is they made digital retailing tools co-opable. So you could use the advertising support to pay for digital retailing tools. What’s nice with it is they put a pretty broad spectrum of retailing tools out there for dealers to choose from because a lot of dealers have their own, and they want one platform across all their dealerships, as opposed to trying to manage multiple platforms across different dealerships for different brands. I think digital retailing is still a work in progress, so they also wanted to see the effectiveness of each of the digital retailing providers and what they could bring to dealers.
How has salesperson productivity at Kia dealerships changed during the pandemic? How many vehicles per sales rep per month are now typical?
At our store we’ve seen an increase from 12 units to about 15 units to 17 units per salesperson throughout the pandemic, and what we’ve ended up doing is adding some support personnel around those individuals. Whether it be delivery specialists or technology specialists that follow up after the customer’s left. Because what we’ve seen is that in-person transaction time, that in-person going over the vehicle, certainly because of COVID safety concerns, has diminished. You don’t have as much time to walk through a customer doing a 45-minute delivery to show them all of their features on the vehicle. So we’re having to do a lot more of that by technology specialists that are calling the customers after they’ve taken delivery and then walking them through how to do something that they don’t realize their car can do, or that they’re having questions on, especially when you have a lot of the telematic interfaces that you currently have.
There’s a lot more FaceTime, Zoom, WhatsApp; different mechanisms that you utilize now to communicate with your recently delivered customers to walk them through all the features of the vehicle. Salespeople are no longer doing that physically because of consumer choice. They want to come in and pick out their vehicle and pick it up and they want to be in and out as quickly as possible.
Do you feel that Kia has just the right amount of cars, or could it maybe cut one from the lineup?
So when you look at Kia, you have the subcompact — which as mind-boggling as it is because of the cars being such a declining segment — the sales for the Kia Rio, which was again just redesigned last year, is dramatically up, which is such a surprise. But some people just really want a commuter vehicle. It’s got a lot of equipment and there’s a very affordable price and it gets 40 miles to a gallon.
Then you have the Rio, you have the Forte, you have the K5, and you have the Stinger. Then obviously you have Cadenza and you have the K900. The Cadenza and the K900, that particular segment right now is the most difficult segment as far as cars, in my personal opinion. The Stinger and the Cadenza almost overlap in the same segment.
Down the road, who knows what Kia will do with that product portfolio with cars, but certainly the full-size cars, I look at my market data sheets, and the number of cars sold in that segment are minuscule; it’s barely into the double digits a month. So I don’t know what Kia is going to do. I know those are certainly global cars, but as far as in the U.S., if you’re looking at cars, if I was Kia, those full-sized cars would be the ones that I would looking at most closely because the market in the United States for that type of car is such a small sliver of our market.
Has the Telluride been doing better than expected?
That’s been the most successful product launch I’ve ever seen in my 23 years in the car business.
It’s been almost two years since that vehicle was introduced, and the average Telluride sits on dealer lots for less than seven days. It’s amazing. And that’s even when they maxed out production, they stopped all exports of the vehicle, expanded their production and that vehicle is still turning in four to seven days of arrival. Some percentage, between 50 and 75 percent of those vehicles, are pre-sold before they even arrive on dealer lots.
That vehicle has defied and exceeded anyone’s possible expectations. I’ve just never seen a launch like it. It’s a tremendous vehicle, an absolute home run. The price point for what you get is just amazing.
How are your electrified options doing? Do you think Kia is learning how to operate in that electric vehicle space?
Kia certainly knows how to operate in that space. I think it’s a question of when consumers are going to be able to embrace it with more open arms and more fervor. The pandemic just completely cratered the price of gas. We’ve seen a lot of drop in demand for our green products right now.
That ability to pay a premium for a hybrid vehicle, or a plug-in or a completely electric vehicle right now, that price gap and desire from the consumers to actually adopt those vehicles has diminished in my perspective during the course of the pandemic. It doesn’t mean it’s not going to come back afterward. It’s just right now, it’s a bit of a heavier lift.
Kia has come out with the Niro that’s done very well. You’ve got a 50-mpg hybrid or 239-mile range electric vehicle. Even when you’re looking at ratings on Consumer Reports and things like that, the Niro EV has been rated very, very highly and more highly than some of the stock market darling competitors. It’s been a fabulous vehicle for the people that have the desire for the EVs.
We’ll have a new vehicle coming out toward the end of the year. But that’s going to be just a ground-up, EV-only platform, so we’re very excited about that. The new rollout is just something crazy; they’re going to have 23 EV or PHEV vehicles, whether it’s existing models that have that capability added to them, or like this new one coming at the end of the year, just an EV-only vehicle that they’re introducing, in the next five years. It’s just going to be an onslaught of EV and plug-in hybrid and hybrid vehicles. You’re probably going to see that as a component of almost every Kia model going forward.
But even the 2021 Kia Sorento, that’s Kia’s latest product launch and the hybrid Sorento is just getting released now to the country. You have a sport utility with tremendous capabilities with third row. I think the rating for it is, like, 39 mpg with the hybrid engine.
Kia has certainly committed to that and just with their resources and engineering that they’ve had behind them, it’s certainly going to be a ride. They’re determined to really compete in that segment with every vehicle that they have.
We all saw the Kia ad on the New Year’s ball drop in New York. What does that say about the brand that it’s reaching out to customers in that way, and really being out in front of everybody?
It just shows their continued commitment to make people aware of all of the great products that they have. It’s also a testament to their increase in sales and tremendous momentum that they have behind it. They’re gaining share tremendously during the course of the pandemic and during the course of the year. That continued increase in volume allows them to spend and market, and the dealers make money and the dealers then invest in facility and digital processes and customer satisfaction. So it’s just a great, virtuous cycle right now.
Kia is in midst of a golden age of product, and the product launches just don’t stop. We just got the Kia Sorento and now we’re awaiting the Kia Carnival, which is that new CUV/minivan replacement that’s coming over in the next couple of months. And then we have the all-electric just six months behind that. We just finished launching the K5 in September, or maybe August, and then you had the K5 all-wheel-drive launched in October.
Is Kia asking that dealers use a specific digital retailing tool or process?
Fortunately, Kia is not asking that. Kia has asked all dealers to embrace digital retailing and have a provider and a process. They have five different providers that dealers can choose from and get 100 percent co-op to pay for that digital retail provider. Dealers can also choose a different provider outside of those five and not be able to reimburse via advertising co-op, but they haven’t imposed a clear-cut, one-size-fit-all. That would be very clunky and inefficient for dealer groups that want to have the same digital retailing platform that they’ve developed and have branded and built over time.
How much emphasis will or should be placed on eliminating wet-signature requirements in 2021?
There’s already been a substantial emphasis on reducing wet-signature requirements. It certainly would be nice when you have so many overlapping forms when you’re talking about the actual brands themselves with incentives claim forms or other specific acknowledgments. That being said, there’s a lot of states that still mandate wet signatures on their motor vehicle documents. So no matter what the brands do, we’re not going to be in a position to completely eliminate the wet-signature requirements until the state governments decide that’s something they’re interested in doing as well.
Do you feel that consumer expectations for the sales process are going to be changed forever?
I think it’s a pendulum. The pendulum based upon 100 percent focus on person-to-person time was what the expectation was. The red carpet, white-glove treatment when you came into the dealership. That was the expectation five years ago. That pendulum started to swing a little bit into a more abrupt, shorter transaction with consumers doing a bit more research before they came in.
Now because of the pandemic, that pendulum has swung dramatically to a transaction with as little human interaction as possible. However, I think the pendulum will start to swing back. It won’t swing back to where it was before the pandemic, but certainly consumers can demand more in-person interaction and face-to-face, 100 percent focused person-to-person treatment when the pandemic is over.
Will it ever go back to where it was before the pandemic? No, probably not. But the pendulum is swinging the other way for years now regardless.