Kia 2007 Annual Report Download - page 53

053_ Kia Motors Annual Report 2007
In the meantime, Kia will expand sales in the general market centering on Latin America, Africa and the Middle East that are showing healthy economic growth
supported by high oil price and a rise in raw material price. In the Latin American market, we will promote differentiated sales activities of each vehicle type, while
increasing sales focusing on medium- and full-size cars with high profitability. In the markets of Africa and the Middle East, we will step up sales management in
major countries such as Saudi Arabia and South Africa.
In the Asian market, in response to economic recession and restriction on imports of CBU(Completely Built-up Units) in major markets including Malaysia and
Singapore, we will examine the CKD project and establish various export strategies. In the Chinese market, we will increase sales by strengthening sales network
through dealership expansion and enhance brand image through sponsorship for Chinese National Football team and Korean Wave marketing.
Overseas Plant Production and Sales
The plant in Slovakia (Kia Motors Slovakia), which started the mass production in December 2006, sold 144,078 units in 2007. 123 thousand units were sold in
Western Europe, 21 thousand units in Eastern Europe.
123 thousand units of cee’d, a strategic compact passenger car in Europe, were sold and the sales of Sportage, which started the production in the second half of
2007, reached 21 thousand units. Starting from 5Dr hatchback, the cee’d model line up was added with wagon in the second half and 3Dr hatchback at the end of
2007.
cee’d was designed in Europe and then has got positive responses for its design specifically to suit European tastes.
In the “2008 European Car of the Year”(COTY) award in which auto journalists and specialists participated as a jury and pick the best model among newly released
cars in Europe that year, cee’d came in fourth place out of 33 models. In addition, cee’d was given a favorable receptions such as ‘Best Wagon’and ‘Best Hatchback’
in major media and auto-related organizations in Europe. Moreover, pro_cee'd (3Dr hatchback) and eco_cee’d (eco- friendly model) will be added to the line-up in
2008 in order to make Europeans experience the excellent Kia cars directly.
The Slovakia plant’s sales target for 2008 is 225 thousand units: 168 thousand units in Western Europe and 57 thousand units in Eastern Europe. In particular, we are
expected to more than double our sales compared to the pervious year based on strong sales in Russia and Ukraina. By car type, we will sell 163 thousand units of
cee’d with full line-up of three body types, expand the production of Sportage and record sales of 62 thousand units of it.
In 2007, China’s industry demand (which excludes commercial vehicles) reached 5.27 million units, a leap of 24.5% over 2006 (4.23 million units). However, sales
record in Chinese plant (Dongfeng Yueda Kia) was 101,427 units, an 11.8% decrease compared to the previous year. Kia’s Chinese market share fell by 0.8% point to
1.9% of the total market compared to 2006 (2.7%). In 2007, our competitors released about 60 new cars in the Chinese market, leading to competitive price
discount in the industry.
However, we incurred sales loss with maintaining the existing prices as we limited our lineup to two main sales models (Rio, Cerato) and concluded that securing
cost competitiveness should come first than price reduction. Through improving profitability measures like expanding localization, we lowered the price of main
sales models in last August. Also, we reinforced our lineup by releasing Sportage in October and Cerato face-lift in November. As a result, sales could get on a
recovery track from August as a starting point.
The China plant’s sales target for 2008 is 250 thousand units. Plant #1 will produce 110,000 units of Rio, Sportage and etc. and plant #2 which was put into operation
in November 2007 will produce 140,000 units of Cerato. The plant #2 has the designed capacity of 300 thousand units and plans to increase its production volume
by launching new models and a ramp-up process.
In order to reach the sales target in 2008, we are expected to increase our sales by meeting the customers’ needs by trimming main models and diversifying our
models. We will also secure price competitiveness by reducing costs ordinarily through improvement of option combinations and localization ratio to deal with
competitors’ price cut. In line with this, we will increase the number of regional sales offices from existing four to ten and strengthen the sales channel like dealer’s
sales competitiveness. Moreover, we will improve the brand recognition by boosting sports marketing regarding Beijing Olympics.