Kia dealers who hit specific volume targets in 2016 will qualify for financial rewards.
The move is one of several the automaker is undertaking to help boost dealer profitability after sluggish sales in recent years.
Ted Lancaster, Kia V-P and COO, insisted the new initiative was not a traditional stair-step program, but rather a way to motivate the dealer body, now sitting at 190 stores.
“I think we will have target-based programs sporadically throughout the year that give dealers the opportunity, should they hit target, to earn a flat dollar amount per unit,” he says.
“But it won’t be like some of the companies out there, where it ends up being an aggressive means of driving sales.”
Lancaster says dealer profitability was “OK” in 2015 but there was room for improvement. He says the dealer advisory council brought it to his attention after taking over in August and that it will be a “major focus and key metric” for the company in 2016.
“There are a number of key things we can do to improve dealer profitability. One is to make sure retail numbers grow,” he says, noting the OEM will be stepping up its marketing efforts this year.
Kia ads will appear more often on TV. The automaker will also be targeting customers via specialty television networks.
He says the company will also place additional focus on trim mix, noting it makes little sense to put the strongest programs on the least expensive vehicles.
“They’re the ones that typically have the least profitability for the dealerships, so we will push the trim mix a bit,” he says.
While he admits the financial reward program can be a “bone of contention from the dealers,” it is also a solid way to reward effort.
Kia finished 2015 down three per cent with 67,914 units sold. In a mid-December interview with Canadian AutoWorld, Lancaster said the target for 2016 would be to grow sales by five per cent.
Helping hit that target is a handful of new product expected this year. That includes the recently launched refreshed Optima, a new Sportage coming in February, a refreshed Forte in June and the new Cadenza later this fall.
“We might have one other key model that is not finalized yet but one that will impress people,” he added.
Kia has also apparently green-lighted development of its Niro (hybrid utility vehicle). Though he said that vehicle has an opportunity in Canada, Kia Canada has yet to see production plans.