(Press Release) Automotive News, November 26, 2007
Kia Motors America Inc. is the latest — and last — full-line automaker to create a certified used-vehicle program.
Kia introduced the program this month. U.S. Kia dealers will begin selling factory-certified late-model used cars and trucks in the first quarter of 2008.
Kia CEO Len Hunt says the program will introduce consumers to the brand and help shore up its residual values. Kia ranks below the industry average in separate 2008 residual value rankings by Automotive Lease Guide and Kelley Blue Book. A residual value is a prediction of what a new vehicle will be worth in three to five years.
Conservative number
David Carp, Kia‘s director of fleet and remarketing, said the company expects to sell 13,000 to 15,000 certified vehicles next year.
“We base that on our volume of program cars and what we think the dealers will buy in the first year and certify,” Carp told Automotive News. “It’s a conservative number. This will be like another brand and a great source of profit for the dealer.”
More than 80 percent of Kia‘s 630 U.S. dealerships are expected to participate, Carp said.
To be eligible for program certification, vehicles must be no more than five model years old and have fewer than 60,000 miles. They will be inspected, reconditioned and covered by a limited powertrain warranty. That warranty coverage is 10 years/ 100,000 miles, starting from when the vehicle was sold as new.Hunt says many of the used cars and trucks Kia dealers will certify will be retired rental and end-of-lease vehicles.
Kia will sell 15 to 17 percent of its vehicles to rental fleets this year — about the same rate as last year, Carp said.
In the first quarter of this year, he said, rental companies asked Kia for more vehicles to help compensate for cutbacks by General Motors and Ford Motor Co. in their sales of rental vehicles. Kia vehicles typically remain in rental fleets for eight to nine months, amassing 15,000 to 18,000 miles, Carp said. Rentals help get customers who are unfamiliar with the Kia brand into its vehicles, Hunt says.
“It’s good business for us,” he says. “We use it as a big marketing campaign.“
More leases
Leases represent about 5 percent of Kia‘s new-vehicle sales. Hunt says he expects that figure to triple in the next two to three years as the brand introduces vehicles such as the Borrego. The mid-sized SUV is scheduled to reach U.S. dealerships in 2008.
Hunt says Kia will advertise the certified program in print, online and with point-of-sale materials. Dealers will promote the program in their own ads, Hunt says.
