Kia 2005 Annual Report Download - page 64

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64
KIA MOTORS
Our brand value garnished plenty of favorable press both dom estically and internationally during the previous year. The release of Lotze through proactive
prom otions events helped the model gain greater mindshare and trust among households. Internationally, our Sportage and Opirus brands claimed distinction by
jointly taking first place in the 「2005 Autom otive Perform ance, Execution and Layout (APEAL) Study」carried out by JD Power & Associates.
KIA is deeply com mitted to making a positive difference in the lives of Koreans through social welfare events. We held tw o major charitable campaigns: the ‘spare
change from the wages’ campaign and ‘sharing the rice of love’ campaigns. These along with and other volunteer activities w ere perform ed so that w e could give
back to Korean communities.
KIA has m aintained a firm foothold in the market through a steadfast com mitm ent to continually im prove custom er service. Year in and year out, we’ve been
tracking custom er satisfaction indexes carefully. Consistent im provem ents in 2005 quality indices meant that we proudly took top honors with KSSQI for the second
consecutive year. In 2006 we intend to further strengthen our com petencies in ‘custom er centered service quality’ through further adjustm ents to various custom er
satisfaction indexes. We have discovered a favorable correlation betw een better global management and brand value among households. Global management will
be given more leew ay to custom ize their services and to gear prom otional events so that take into account the dem ographics of their client base. Our brand
identity will also be bolstered through creative efforts in culture and sports marketing. We intend to create a further stir for our um brella of brands.
In sum, we will retrench efforts to becom e a favored corporation by enhancing our brand im age through well targeted m arketing activities. This will be
accom plished as strengthen our global managem ent and through social welfare activities that rem ind consum ers that we are a com pany that cares about
communities.
Overseas Business
From the effects of the fall in exchange rates to the continual rise in oil and raw materials prices throughout the year, our managem ent faced a wide array of
form idable challenges. Despite this unfavorable export environm ent, we m anaged to cope with these challenges and developed more flexible export strategies
that better met the needs of each export region. In the end, we racked up a 10.4% increase in car exports; exports rose from 760,786 in 2004 to 840,016 in 2005.
It is widely known that the North Am erican market has turned to cut-throat competition, given that Big 3 are fighting off plant closures during a period of slow ing
global demand. GM, Ford & Daim lerChrysler continued to aggressively push product through the pipeline, hoping to lim it inventory accum ulations and win back
U.S. m arket share. The parade of incentives in the form s low financing rates and cash back incentives did not cease. This weakened our profitability, along with the
fall in the dollar. To offset fierce com petition in North Am erica, KIA shifted som e its sales efforts tow ards Europe, where the exchange rate conditions are more
favorable. As the year came to a close, exports to North Am erica reached 301,764 autom obiles, a 8.8% reduction from the previous year (330,707 units). Although
exports dropped off som ew hat, we are in the process of strengthening local sales teams. We feel such efforts are paying off as our market share is still firm in North
Am erica, at 1.6%. Our retail sales in the US m arket reached 275,851 vehicles, a 2.1% rise over the previous figure of 270,056 units. In sum , sales to North Am erica
rem ained sluggish due to two key factors. First, we offset foreign exchange risks through greater sales to Europe we were not able to ship enough Sportages, which
is the best selling model, to North America. Second, delay of replacem ent of new models in the US. This was the case for the introducing our popular Lotze
(Optima) & Carnival (Sedona) models.
Management’s Discussion & Analysis
• US M/ S • US Market Retail Sales
Volum e (Units)
* Source: Autodata * Source: Com pany data
2003
1.4%
2004
1.6%
2005
1.6%
2003
237,471
2004
270,056
2005
275,851