Kia 2013 Annual Report Download - page 16

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Kia Motors actively implements a global management
system, putting into place production and sales strategies
based on analyses of consumer preferences in each
individual country. These localization strategies are
embedded throughout our entire business process, and
are driving Kia Motors’ sustained growth in the global
market.
We began the introduction of localized models in 2006
with the launch of the cee’d, a model created specifically
for the European market, which prefers practical small
cars. The cee’d has enjoyed great popularity in Europe,
leading to the release of wagon and three-door versions.
The cee’d accounts for approximately 24% of Kia Motors’
sales in Europe. With designs specifically customized for
European consumers, the cee’d plays a significant role in
enhancing Kia’s brand value in Europe.
In the U.S., we are continuing to differentiate the Kia brand
through targeted marketing strategies. As a result, the
Soul and Optima (K5) are both recording monthly average
sales of more than 10,000 units. ALG (Automotive Lease
Guide), which evaluates the residual value of used cars,
named the Soul the grand prize winner for residual value
in the small MPV and subcompact utility vehicle category
in its 2014 Residual Value Awards. ALG gives this award
in consideration of quality, marketability, brand awareness,
and sales strategies to determine a vehicle’s expected
value after a certain period of time/mileage. The Soul
is the first Kia car to receive this award. By establishing
high residual values, one of the most important purchase
factors for US consumers, Kia Motors has proven its high
product quality and competitiveness. In addition, the Soul
ranked first in the Sub-Compact CUV category of the Initial
Quality Study released by J.D. Power & Associates, with
Kia Motors taking fifth place in the overall brand rankings.
The Optima (K5) and Sportage were also ranked first in
Auto Pacific’s Vehicle Satisfaction Awards.
In addition to releasing models that are optimized for
individual markets, we are also expanding localized
production and establishing global R&D centers with
local research personnel. Our plant in Georgia, U.S.
produced 263,000 units of the Optima (K5) and Sorento
last year, along with units of the Santa Fe for our sister
company Hyundai Motor, for a total annual production of
369,000vehicles. Our plant in Slovakia produced 313,000
units of the Venga, cee’d, and Sportage, while our plants
in China produced 551,000 units of the Sportage, K2, and
K3. In addition, Kia Motors’ third plant in China started
production in January 2014. It is located in Yancheng,
Jiangsu Province, and has an annual production capacity
of 300,000 units. This means that Kia Motors has the
capacity to produce more than 740,000 finished cars
annually in China alone. We are therefore now in a strong
position to increase sales in the rapidly-growing Chinese
market. All in all, production at overseas plants grew by 4%
year-on-year in 2013.
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We expect the global economy to improve in 2014, but
new car launches and increased sales promotion activities
by our competitors in global markets, especially given the
weak Yen and strong Korean Won, will result in intensifying
competition.
Even with these challenges, 2014 will be a very important
year for Kia Motors in the global market. With the
construction of our third plant in China, which has an
annual production capacity of 300,000, Kia Motors’ total
global production capacity will reach almost three million
just a decade after reaching one million in 2004. 2014 will
be Kia’s year to boost our competitiveness and establish
a business that will support production and sales of three
million units globally. Change and innovation will drive our
growth as an advanced, global company.
In addition, we will further strengthen our focus on
qualitative growth with a ‘value pricing’ strategy and build
the foundations to enable us to achieve our business plan
targets. We will increase the sale of localized models, and
launch new cars and new versions of current models as
part of our on-going efforts to improve profitability.
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