CAR Tom Loveless Vb

TOM LOVELESS
Vice President Sales
Kia Motors America
1
VEHICLE SALES AND RECESSIONS
• The volume decline over the last several years is the largest in history.
Where do we go from here?
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
WORLD WAR II
10,000,000
8,000,000
6,000,000
20 Years
4,000,000
2,000,000
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
1925
0
2
AGENDA
• The Future?
Economy
Technology
Demographics
• Kia
Who are we
Our approach
• Q&A
3
ECONOMY OUTLOOK
• GDP is expected to return to a more normal level, providing some much
needed stability to the market place.
4
CONSUMER OUTLOOK
• Consumer sentiment is improving in early 2012. Pent-up demand for
vehicles and other durable goods is helping on the spending side. Both
are good signs.
5
EMPLOYMENT OUTLOOK
• Unemployment remains high compared to historical standards but is
projected to improve gradually over time.
6
HOUSING OUTLOOK
• No significant sign of housing market improvement is expected until
2013. A modest recovery in home sales and construction is expected in
2012, but house prices will likely drop more over the course of 2012.
7
GAS PRICE OUTLOOK
• According to U.S. Department of Energy, regular‐grade motor gasoline
retail prices are expected to average $3.55 per gallon in 2012. Recent
options and futures price data imply that the U.S. average pump price of
regular gasoline could exceed $4 by June.
$2.81
$3.26
$2.35
$2.78
$3.53
$3.55
$3.59
2007
2008
2009
2010
2011
2012
2013
8
AUTO INDUSTRY SALES OUTLOOK
• Pent-up demand, slowly improving labor market and better availability of
credit will contribute to industry growth in 2012.
SEASONALLY ADJUSTED ANNUALIZED RATE (UNITS IN MILLIONS)
18
17.0
16.6
16.2
16.1
15.6
16
14.7
14
13.2
12.8
13.6
11.6
12
10.4
10
8
2005
2006
2007
Baseline Forecast 55%
2008
2009
2010
2011
Optimistic 20%
2012
2013
2014
Pessimistic 25%
Forecast data source: IHS
9
2015
ALTERNATIVE POWERTRAIN MARKET
• Alternative powertrains will double in volume over the next few years,
accounting for about 15% of the total industry.
85%
15%
10
ALTERNATIVE POWERTRAIN MARKET
• Diesel and Hybrid will grow the most. Electric vehicles will grow
significantly on a percentage basis, but will remain a minor portion of the
overall industry.
Diesel
Hybrid
(Full, Mild)
EV (Battery,
PHEV)
Hydrogen
11
28 EV COMPETITORS BY ~2015
In market now
Ford Transit Connect EV
2012
2013
RAV4 EV (2Q ‘12)
Audi e-Tron (1Q ‘13)
Tesla Model S (2Q / ‘12)
Mini E
Nissan Maxima (2Q/’13)
Coda EV (1Q/’12)
Tesla Model X (1Q/’14)
BMW i3 (4Q/’13)
Volvo C40 EV (4Q/’13)
Scion iQ EV
Nissan Leaf
smart fortwo EV
Ford Focus Electric (1Q/’12)
2015
Nissan NV EV (1Q/’14)
Infiniti EV (1Q/’13)
Tesla Roadster
BMW 1-Series EV
2014
BMW Z2 EV (1Q/’15)
Tesla Model C (2Q/’15)
M-B SLS AMG (3Q/’14)
VW Golf EV (4Q/’13)
(2Q/’12)
Mitsu i
Honda Fit EV
Chevy Spark EV
Fiat 500 EV
(3Q/’12)
(4Q ’12)
(1Q/’13)
VW Up! EV
(4Q/’13)
12
POPULATION GROWTH BY AGE CATEGORY
• Population is aging
13
POPULATION GROWTH BY AGE CATEGORY
• This shift will be even greater 10 years out
14
INDUSTRY TRENDS – VEHICLE SEGMENTS
• The midsize and compact segments will continue to be the majority of the car
market, but sub-compact and luxury segments are expected to grow.
Luxury
Sporty
Green
Large
Midsize
Compact
Micro/Sub-Compact
15
INDUSTRY TRENDS – VEHICLE SEGMENTS
• The CUV segments will continue to grow. The pickup segment is also
expected to rebound somewhat.
Luxury
Pickup
SUV
Other MPV
Mid MPV
Mid/Large CUV
Compact CUV
Sub-Compact CUV
16
NEW PRODUCT INTRODUCTIONS
• The number of new model launches will be well above the historical
average for the next two years.
17
TOP 20 MARKETS
• The top 20 markets account for nearly half of the total industry
18
TOP 20 MARKETS IN THE U.S.
• New York and Los Angeles are by far the biggest metro markets.
1-10
11-20
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Kia … Who Are We?
20
KIA’S HISTORY
• Founded in 1944, Kia has evolved to become a key player in the global
auto industry.
2010
Kia Motors Manufacturing Georgia Production Begins
1998
Hyundai Automotive Group
1994
Kia Enters U.S. Market
1974
Korea’s First Domestically Produced Passenger Car
1951
Production of Korea’s First Bicycle
21
2011 KIA GLOBAL SALES BY REGION
• Annual sales are nearly 2.5 million. North America has surpassed Korea
as Kia’s largest market.
551K
493K
478K
Global Sales
2.5 Million
462K
263K
U.S.
485K
184K
59K
North
America
Korea
Europe
China
Middle
East &
Africa
Central &
South
America
Asia &
Pacific
23
KIA MOTORS AMERICA
• Entered the U.S. market in
1994
• More than $1.4 billion
invested in U.S. market in
the past decade
U.S. Headquarters
Irvine, Calif.
Kia Motors
Manufacturing Georgia
• State-of-the-art:
– Headquarters
– Design Studio
– Manufacturing Plant
– New Products
Kia Design Center America
755 U.S. dealers
• Expanding dealer network
24
U.S. SALES AND MARKET SHARE TREND
• 17 Straight years of market share growth
4%
500
2012
YTD
Up 33%
2011
Sales
Up 36%
3%
400
300
2%
200
1%
100
0%
0
93
94
95
96
97
98
99
00
01
02
Sales
03
04
05
06
07
08
09
10
11
Share
25
THREE-YEAR GROWTH (2011 VS. 2008)
• Kia is the fastest growing mainstream brand in the U.S.
78%
61%
45%
42%
29%
26%
Kia
Hyundai
VW
Subaru
Buick
Jeep
26
How is Kia doing it?
Value has become the new “cool”
27
“VALUE FUNNEL”
• Many critical factors play a role in establishing “Value”.
Quality
Quality
Design
Design
Brand
Content
Network
Price
Brand
Content
Network
Price
28
“VALUE FUNNEL”
• The price of entry. A prerequisite to compete.
Quality
Quality
Design
Brand
Content
Network
Warranty Costs
Price
29
KIA MOTORS MANUFACTURING GEORGIA (KMMG)
• KMMG has been a key growth enabler
– $1.1 billion investment
– More than 3,000 team members operating three shifts
– Created 10,000 new jobs in West Point and surrounding areas
– 2012 Optima added to production line in September; 360,000
capacity in 2012
30
“VALUE FUNNEL”
• Good design evokes an emotional response.
Quality
Design
Brand
Content
Network
Price
31
DESIGN-LED TRANSFORMATION
• Nine all-new products in three years driving ALG residual values up 49%
Peter Schreyer
Chief Design
Officer
32
“VALUE FUNNEL”
• Brand must be relevant to consumers. Builds pride in ownership.
Quality
Design
Brand
Content
Network
Price
33
34
60 Soul
30 Dunk
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“VALUE FUNNEL”
• Useful content that meets consumers needs and wants helps connect
Consumers with their vehicle.
Quality
Design
Brand
Content
Network
Price
36
“VALUE FUNNEL”
• Delight the customer. A positive experience is critical to future success
Quality
Design
Brand
Content
Network
Price
37
“VALUE FUNNEL”
• Price is a function of the success level in all other factors.
Quality
Design
Brand
Content
Network
Price
38
“VALUE FUNNEL”
Quality
Design
Brand
Content
Network
Price
Prerequisite to Compete
Distinctive and Athletic
Proud to Own
Relevant to Consumers
Delight the Customer
Measure of Success
39
RECAP
iMarket landscape is changing with unprecedented speed
- Demographic Shifts
- Technological advances
- Economy and Government Policy
iValue is the new “cool”
iU.S. Market is critical to Kia’s success
- Capital Investment
- Product Investment “Quality & responsibility”
40
Thank You!
41