Kia 2004 Annual Report Download - page 13

13
KIA Motors_2004 Annual Report
SPORTAGE SPARKS SALES IN KOREA
The new Sportage, designed as a com pact, luxury SUV that performs like a passenger car, made its debut in August 2004
and has been such a big hit that inspired many to buy in a sluggish domestic automobile market. More than 10,000 sales
contracts were finalized within five days after launching, and over 16,400 units were sold after three months. By the end
of the year, the sales figure had reached 27,513. The hugely popular new Sportage has emerged as the best-selling
vehicle in Korea in 2004. It solves the driver com fort problems experienced with other SUVs in its class, and cabin room
has been maximized. Other attractions for Korean buyers include the luxurious interior, top-end specifications, award-
winning exterior styling, aw ard-w inning unique colors, and the most fuel-efficient among Koreans SUVs.
OVERSEAS CREDIT RATING RAISED TO "Baa3"
In November 2004, Moody's Investors Service raised its credit rating for Kia Motors two notches, from "Ba2" to "Baa3," and
judged Kia's future credit rating as "stable." Prior to the Korean financial crisis of 1997-8, Kia Motors did not receive a
separate rating from Moody's. After the company's bankruptcy and subsequent recovery, its credit rating has been
adjusted upward four times and now has reached investment grade for the first time ever. The "Baa3" rating means the
company poses no risk to investors, lowering the interest it must pay to raise capital and bolstering its corporate im age.
PRODUCTION SYSTEM OVERHAUL FOR BETTER EFFICIENCY, PROFITABILITY
Kia Motors has gone forw ard with a project to retool its plants in order to make them m ore efficient and more profitable.
The Gwangju plant started up production of the new Sportage in June 2004. The facility now has the capacity to turn out
350,000 units a year and sm all variation/ large lot production system, laying the groundwork for profitable operation. The
facility will be further improved and annual output will rise to m ore than 400,000 units by the time the plant will have
begun to produce the upgraded Carens (project name: UN) in 2006. The production line improvement projects at Sohari
and Hwasung plants have also proceeded smoothly.
LEADING SALES GROWTH IN EUROPE... AGAIN
The European Automobile Manufacturers Association (ACEA) has released its data on automobile sales in 18 Western
European countries during 2004. According to that report, Kia Motors sold 154,803 vehicles during the year, up 44.4% from
2003. This is the second year in a row that the company has set the fastest sales growth record in Europe; the company's
sales grew 48.4% year on year in 2003. The company's success comes form stronger marketing and the introduction of
new models that are made for the European market such as the Morning (Picanto) and Cerato. The company expects to
continue its record grow th streak in 2005, when it introduces the New Sportage (compact SUV) and New Pride (follow -up
to the Rio).
PI UNDERWAY TO REACH TOP-TIER GLOBAL STATUS
A major process innovation (PI) project has been kicked off at both Kia Motors and Hyundai Motor to acquire the
information management capabilities and corporate processes needed to support a global production and sales system
for over 5.5 million units a year. Processes are being standardized globally, and a system for real-time business decision-
making is being established. The corporate culture is also being reoriented toward customers, while employee consensus
on the corporate vision is being nurtured. Current ways of thing and acting as well as information system s are all being
improved so that the com pany can reach its goal of being one of the world's elite autom akers.