Kia’s latest CPO alterations aimed at driving volume

The latest evolution of Kia Canada’s certified pre-owned program had a strong first month with a healthy sales volume increase and a 50 per cent hike in warranty sales.

Though it is early since the April 1 launch of the latest version, reps at Kia and LGM Financial Services, which is helping administer and support the program, feel the early uptick in volume could mean they are on the right path with a competitive CPO program that will ultimately drive revenue for its dealer network and ensure its used units stand above the crowd.

“We don’t just want sales and volume, we want customers to appreciate a Kia vehicle in the used-car market,” explained Brad Dickerson of LGM. “We all know if the experience is good, we’re likely to see repeat business. The idea was provide the most amount of customer benefits and features so the customer would want to buy Kia CPO.”

This is the third version of a certified pre-owned program first launched by the brand in the summer of 2009. The latest evolution has seen a number of additions to help build service and sales retention for participating dealers.

Kia’s CPO units now come with four free lube, oil and filter changes, a six-month term for paintless dent removal, a 12-month term for key and keyless remote replacement, a free third-party condition report and available warranty coverage ranging up to four years and 80,000 kilometers.

That is in addition to exchange privileges, Kia approved inspection form, Kia approved reconditioning process, a CarProof history report, SiriusXM Satellite radio trail on applicable models and a $500 graduate bonus where applicable

“These were added to differentiate between other CPO programs,” explained Richard Pasta, Kia national daily rental fleet manager. “These are all items that the sales person can use as a tool to highlight the benefits of a Kia CPO unit and be the difference maker, thus conversion of sale. These are things that could put them over the top in terms of the sale.”

The automaker contends revisions came courtesy of dealer feedback and that the intent was to do something unique in the marketplace aside from touting the standard four pillars of CPO – warranty, exchange privilege, roadside assistance and third-party inspection.

When asked about volume, Pasta and fellow fleet manager George Lykopoulos said they are looking for roughly 40 per cent growth annually – a realistic target considering the number of Kia’s retailed in recent years and the timing of its first wave of lease returns.

Pasta said Kia launched a new lease product in February 2012 and the penetration has increased year over year. Those first units are set to start coming back in 2015, which will make them prime candidates for CPO.

The pair also confirmed they are engaging the brand’s fleet customers through various channels to get daily rentals and executive fleets units into the program sooner than later.

The two-tier program is Kia-managed, funded and supported. Dickerson said LGM provides administrative sales and marketing support. That includes the use of LGM’s DRC portal to administer the CPO vehicles, support of the warranty in terms of costing, claims, remittance and more. LGM will do all the reporting meaning it will house the data for the automaker.

LGM dealer development managers will also offer dealer support and training.

Helping get the word out to consumers will be an online campaign.

Lykopoulos said that since most used-car buyers start their search online, it was a logical starting point to hit shoppers.

“We are trying to target them back to our site and our dealer’s inventory so they have a good indication of what differentiates the Kia CPO vehicles from any other listing,” he explained.

“One thing to note is that when a consumer takes a look at a vehicle for sale, we have both a third-party condition report and a CarProof report for them to see. It’s not just make, colour and some glamour shots. We have everything to make them more comfortable.”

Boost Motor Group is handling the condition reporting.

“That condition report from Boost could allow that type of trade, similar to how a dealer buying from an auction depends on that report to be his eyes and ears. We’ve taken that philosophy to the retail space. Now the consumer can see the pictures and a condition report from a third party so we are putting all our cards on the table. There hasn’t been anything like this on the retail side.”

The system also has a back-end using Kia’s upstream channel AGX. The platform, developed through North Toronto Auction has both retail and wholesale views that will allow dealers to exchange and trade amongst each other.

“That is a new concept and will take some time for dealers to digest… Essentially, if you have a red Soul in your CPO lineup and your customer wants a blue one, you can log-on and find one at a dealership 100 kilometres away just like with a dealer trade so they don’t lose that sale.”

“With the enhancements made, Kia is truly looking to spark interest in the eyes of the consumer,” Dickerson said. “The new enhancements help deviate from the norm by providing further peace of mind, further quality assurance, and easing the out of pocket expense associated with buying a pre-owned vehicle.”

Pasta said that for Kia dealerships, the consumer centric program allows dealers and its sales force to add true value when selling quality pre-owned vehicles.

“When the value is there, when it can be discussed and is appreciated by the customer, that customer is more likely to buy the vehicle. All the while, the customer has a positive experience, will come back to that dealership and tell their friends.”