Kia 2009 Annual Report Download - page 31

REDEFINING
MOBILITY
KIA MOTORS
ANNUAL REPORT
2009

REDEFINING
MOBILITY
KIA MOTORS
ANNUAL REPORT
2009

Europe market
The most significant influences on the European auto market
in 2009 were government support measures for the disposal of
aged vehicles, most notably in Germany and the UK. These eorts
kept year-on-year demand shrinkage to a minimum, despite the
continuing hardships experienced by many European economies.
Kia Motors took advantage of the stimulus measures by actively
promoting its small-sized passenger vehicle line-up, touting the
fuel efficiency and environmental benefits of these models. We
also worked to streamline our dealer network and add more high-
volume dealerships to drive our market share upward.
Kia’s European strategy in 2010 will prioritize the replacement
of poorly-performing dealers with high-yielding dealerships in
major markets, upgrading dealership facilities, improving service
delivery and intensifying our marketing and promotion activities.
We will increase the supply of small-sized vehicles and launch
products that cater to emerging consumer demands. These
include the B-segment MPV Venga and the eco-friendly Sportage,
which offers reduced CO2 emissions, smaller displacement and
higher fuel eciency than its predecessor.
China market
Total passenger vehicle demand in the Chinese market was up
53.6% in 2009 thanks to comprehensive government policies to
boost auto sales.
Kia Motors posted 70% growth in China as a result, with vehicles
of 1.6L or smaller comprising the greatest share of sales. Pride (Rio),
previous generation Cerato and the new Forte all recorded solid
gains, as did the Sportage SUV. Kia’s overall market share in China
rose from 2.6% in 2008 to 2.9% last year.
With the Chinese economy showing positive growth signs in 2010,
the market is expected to record a steady increase in demand for
new cars. Consumer demand for personal vehicles is strong and
growing, and it has been announced that tax incentives for small-
sized vehicles will continue. Nonetheless, we must be prepared for
increasingly erce competition as rival carmakers release newly-
designed models targeting Chinese consumers.
Kia Motors will respond to this challenge by pushing sales of our
tax-incentivized Forte and Cerato, and introducing new vehicles
such as the Sportage. We are also proceeding steadily with the
expansion of a well-supported nationwide dealer network.
MANAGEMENT’S
DISCUSSION & ANALYSIS
Rest of the world
In 2009, Kia continued to tap into new markets and expand
globally in regions such as Eastern Europe and Latin America by
increasing our sales support for new models likethe Forte and
Soul, and oering competitive nancing packages in partnership
with local nance companies.
Total sales for the rest-of-the-world amounted to 455,000 units, up
8.7% year-on-year. The majority of sales came from regions such
as the Middle East, Africa and Canada, where Kia has had a strong
presence for several years.
In Africa and the Middle East, sales momentum continued to
gain strength thanks to the company’s attention to fostering its
relationship with the Gulf Cooperation Council, as well as the
emerging markets of North Africa. We also benefited from the
Brazilian government’s tax reductions on the import of industrial
goods.
Kia Motors will continue to explore new markets and expand its
global presence in 2010.
We will be active in local biddings and strive to secure orders
in all major countries. In Africa and the Middle East, we expect
to see growth in high value-added mid- to large-sized vehicles,
particularly in Saudi Arabia. In Latin America, particularly Brazil,
demand will likely swing toward stylish new models of the Forte
and Soul as local economies recover from the economic slump.
PRODUCTION
Kia Motors currently operates four assembly plants in Korea
that produce complete vehicles, including OEM manufacturing
centers that produce light vehicles. Our output in 2009 was
1.137 million units of assembled vehicles from a production base
with a capacity of 1.28 million units (1.5 million units standard
capacity), which was a 7.8% increase in production year-on-year.
The production increase came in response to a dramatic rise in
domestic demand, spurred by strong policy measures to promote
vehicle sales. The demand was unbalanced, however, as demand
of small-sized vehicles actually increased, while domestic demand
for RVs and large-sized vehicles was restrained. To meet this
challenge, Kia adapted its RV production lines to enable them to
produce small-sized vehicles. These lines were up and running by
the end of 2008, and enabled the company to satisfactorily meet
the demand for small vehicles throughout 2009.
Kia’s Chinese plants were set up as joint partnerships with Dong
Feng and Yueda, and will be able to produce a total of 430,000
units when both plants reach full production capability. 2009
production totaled 244,000 units, up 75.8% year-on-year, driven by
surging demand for the under-1.6L models Cerato and Rio, which
received the greatest tax incentives from the Chinese government.
Sales of the Forte C-segment passenger car, launched in China in
June, were also strong. We anticipate high demand for the Soul
B-segment CUV while was introduced to the Chinese market at
the end of 2009 based on the model’s success in every market
where it has been launched so far. The Soul is also expected to
make a significant contribution to increasing the profitability of
Kia’s Chinese operations.
Due to the ongoing recession in Europe, our Slovakia Plant - where
cee’d and Sportage are produced - recorded an output of 150,000
units in 2009, down 25.6% from the previous year. The majority of
European production is sold in the European market, with a small
number of units being exported to the Middle East and Africa.
While demand recovery in Europe is still uncertain, the Slovakia
(thousand units)
2007 2008 2009
Korea Plants 1,119 1,055 1,137
China 107 139 244
Slovakia 145 201 150
Overseas Plants 252 340 394
Total 1,371 1,395 1,531
* Including OEM Production (Picanto - Donghee Automotive in Korea)
CHINA MARKET SHARE
2007
2.0
2.6
2.9
2008 2009
(%)
* Source: China Passenger Vehicle Group
US MARKET SHARE
2007
1.9 2.1
2.9
2008 2009
(%)
* Source: Autodata
WESTERN EUROPE MARKET SHARE
2007
1.6 1.6
1.7
2008 2009
(%)
* W.Europe: EU+EFTA countries / ** Source: ACEA, Company data