Hargreaves, who joined Kia in 2011, told us he had seen the whole metamorphosis of Kia over the years.
He said: “We’ve had consistent growth in pretty much every year. The exceptions are 2011, because that was the year after the Scrappage Scheme. So, things weren’t quite the same, although we did quite well with Scrappage. Then, obviously the other one is 2020 – the big lockdown era.”
The biggest milestone for Kia in the UK took place last year, when it sold 100,000 cars here for the first time.
Hargreaves said: “We’re very proud we got to the 100,000 car target, I can remember in my interview back in 2011, with Michael Cole who was the MD, and him saying ‘we want to do 100,000 cars, and we want to do 5% fleet share’.
“I didn’t think it was realistic, but what we thought we could do, we’ve done. In fact, we could have done it quicker, except for the constraints on supply, so it’s been a consistent growth strategy.”
A lot of that growth has come from fleet, Hargreaves explained, having started with a 70% retail and 30% fleet mix. Hargreaves said: “We moved to mirroring the market and did a little more fleet than retail last year – but there were reasons for that. What we’ve shown is a good and consistent growth pattern.”
Talking of last year, Hargreaves said Kia’s sales were 59% fleet and 41% retail. He said: “We did more fleet volume than anyone else in the market. The reason for that was, we didn’t want to pull out of channels.
“Other manufacturers looked at where they were making the most money – it was retail rather than fleet. So, they stopped doing all fleet business and moved everything they had into retail.
“We took the decision not to do that, because our feeling was to keep our fishing line in all the ponds – rather than be in and out on a short-term basis.”
With all this fleet volume, Kia was in the number one spot until nearly the end of the year. Hargreaves said: “We ended up number two, behind VW, and we had a fleet share much higher than it has ever been before and it reflected our strong performance. I think we did the right thing there, because rather than being in and out, we just kept our presence at a consistent level.”
Hargreaves promises more equilibrium in 2023.
“This year we will probably rebalance that to try to get back more in line with the market,” he said. “I think we will still probably be more fleet dominated than we are retail, but we will rebalance that.”
As to what Hargreaves expects to sell this year to fleet, he said: “If we look at diesel, we’re doing less than the market in fleet, but we’re doing about market average on petrol. As a percentage, we’re doing a higher percentage of hybrids in the market. We are slightly behind on PHEV, and electric vehicles in fleet. The reason for that is you’ve got companies like Tesla who don’t offer anything other than electric cars, and other new manufacturers as well.
“Originally there was just petrol and diesel, our first EV was the Soul EV 2015, but it was so tiny you can’t see the demand really. It is almost better to look at the last few years, you can see that EV demand is easier to pick out. We’ve gone from being just traditionally petrol and diesel to now if you look back at 2022, we’re doing half our volume in petrol, we’re still doing some diesels – but not many! We’re doing a lot of hybrid, plug-in hybrid is pretty much in-line with the market and then EV is obviously growing and growing, because we’ve got more EVs now.
“Our electric percentage is very high compared to manufacturers that offer all the powertrains, but because you’ve got some players in the market that don’t do anything other than EV, we’re behind the market average on fleet. Retail is not that dissimilar, again we’re looking at similar trends. We’re doing a lot of fleet sales with models with a battery in fleet, slightly higher if you add everything up than the market average, but not quite in-line with the percentages of EV, HEV and PHEV.
“In 2014 we had one EV, now we’ve got 11 EV and PHEV models. With all these battery-powered cars, it has meant our average CO2 has fallen massively from 164g/km in 2007, to 106g/km and we’re ahead of the industry average on that.”
After a busy 2022, Hargreaves tells me this year will be a quieter one for new Kia product with the EV9 due at the end. But there are lots of products coming, and by the time we get to 2027, Kia will have launched 40 EVs – nine for the UK, including an electric LCV in 2025.
Asked if he’s worried about what Tesla price reductions will do to Kia EV residuals, Hargreaves said: “It did cause us some concern about whether we would be dragged down with them in terms of residual values, and all the grief that that can bring. We’ve had some meetings with the guides and have been at pains to point out as to what we’ve been doing to makes sure our RVs should stay strong.
“We have done very few internal registrations of EVs, the fleet support levels on EVs have also been incredibly low all last year and certainly this year. When I mean low, you’re looking at figures like two or three per cent fleet discount.
“We have a presence in rental, with ICE vehicles, but not with electric cars. Partly because the demand for EV is less in rental, and partly because we’ve chosen not to do it.
“Another potential source of vehicles leaking out uncontrolled, is with dealer demonstrators. Again, with the EV demo programme and the financials we put together for that, it ensures that either all the demos are held for a long time and sold by the dealer network. Or they come back to us.
“Certainly, looking at what’s happened to our residuals since the Tesla action, we have not suffered in the same way. I believe this is because we have made a strong statement to the guides about what we’ve done to control any short-cycle cars in the market. There is also the Business Service Promise, that we introduced last October which helps RVs as well.”
Despite the rebalance on fleet sales, according to Hargreaves Kia is still looking at a small growth this year. He said: “Our 100,000 cars might increase to 105,000 cars this year. What we have got, is a very strong order bank now. So, if you look at all the powertrains, we’ve got order cover for about half the total volume already.
“We came into this year in a strong position, we’ve got lead times which are now almost ideal, in terms of not being out of scale.
“EV6 at 12 months is a bit longer than we’d want, but for cars like the Niro EV, you’re looking at a four to six-month lead time. We’re still taking orders, it’s a healthy position.”
