KIA UK has just locked its dealers into the franchise dealer sales model and in doing so has rejected the adoption of the agency sales model for the Kia brand in the UK for the rest of the decade.

The move to lock in the franchise model for so long was revealed in an interview published in AM Online with Paul Philpott, president and CEO, Kia UK following the brand’s topping of the latest UK dealer attitude survey.

In the latest National Franchised Dealers Association (NFDA) Dealer Attitude Survey, Kia UK was the brand that achieved the highest score of all UK brands with an overall rating of 9.5 out of 10. Eighty per cent of Kia dealers responded to the survey.

Over the past 15 years of dealer satisfaction surveys, Kia has achieved a top-three place. Kia UK sales place it in the top four brands in the UK year to date September with a 6.2 per cent market share (89,000 units sold).

Paul Philpott

AM Online, in an interview with Mr Philpott, said that one area in which Kia dealers ranked the company highly was its approach to future retail relationships.

Mr Philpott told AM Online that “we as a brand are not going forward with an agency relationship – we’re sticking to the more traditional franchise agreements”.

“We have just re-signed the entire network on new agreements that take us through to the end of this decade,” Mr Philpott said.

Asked by AM Online if Kia’s success in the UK was due to its commitment to maintaining a more traditional business model, Mr Philpott said: “I wouldn’t necessarily like to conclude that but what all dealers want is a profitable business, a consistent business with a clear future. 

“We are asking them to roll out new branding and a new global store concept which involves about an average £250,000 ($480,000) investment by each Kia dealership. 

“They need certainty about the future and they need confidence about the people that they deal with. And that’s why, in part, the NFDA survey is important because it says the dealers trust us, respect us, and have confidence in our future.”

AM Online asked: “Your performance in terms of profit return for your dealer partners was superb. What assurance can you give dealers that that will continue?”

Mr Philpott: “What is important is that the profit return that dealers are making doesn’t come just from one area. So if all of our profits were coming from new car sales and not much from parts and accessories or after sales and not much from used cars, I’d be much more worried.

“But each area of the business is generating good and improving profit for each dealer. One of the things that drives new and used car profitability is how good your products are vis-à-vis everyone else’s.

“And we have a very busy next few years in terms of new product introductions, particularly around electric vehicles. We will have seven electric vehicle cars by 2027 and we need to work with the dealer network to ensure that the profit returns on electric vehicles are as good as they have historically been on ICE vehicles,” he said.