Round 1 – Kia gear up for the end of scrappage battle

There can be no doubt about the real beneficiaries of the UK scrappage scheme. It’s not the punter as in a lot of cases he may have got more than £2000 for his car under normal circumstances and probably would have got a bigger discount on new. It’s probably not the environment; I’m wearing gloves as I type this so I can see why they quietly changed the name from “global warming” to “climate change”. It is of course, in the main, Korean manufacturer The Hyundai-Kia Automotive Group.

They’re the big, big winners, blowing all competition to smithereens with container ship after container ship of shiny new cars arriving in UK ports week after week. It’s not just the UK where Kia and Hyundai have dominated the competition either; in Germany Kia’s new-car registrations were up 65.5 percent to 51,338 units through to November thanks of course to the Umweltprämie that slashed 2,000 euros off the already affordable Picanto minicar and Cee’d.

But what happens when the scrappage scheme ends and not so many people want to buy their cars anymore?

Well the Korean scrappage powerhouses are already one step ahead with Kia announcing that, starting January 1st, they are offering 7 year warranties on every single car they sell in Europe. This quite remarkable warranty only used to cover the Cee’d and Sportage followed by 5 year warranties on the Soul and Sorento and more run of the mill 3 year warranties on the remainder of their models but will now cover all models in the range.

In a statement Kia Motors Europe Chief Operating Officer, Paul Philpott, said the new incentive is part of the Korean automaker’s aim to become No. 1 in the world for “customer satisfaction”.

Of course the much feared nose dive in sales at the cessation of various European scrappage incentives will have had a large bearing on the decision to offer the elongated warranty across the product range.

The widely held notion is that a lot of the car purchases made in 2008 were simply brought forward and thus created an unrealistic spike in sales, amongst other things. This means a lot of manufacturers will be thinking long and hard about maintaining sales volumes and the fight for market share in 2010 and 2011 is likely to be a magnificent and, dare we say it, costly one.

Iain Ronayne
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  • When will the scrappage pot run out of cash?
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    Comments: 1
    1. Mark Robbins
      11 years ago

      The thing here is Kia’s ability to understand its customer base and take advantage of it, how many young trendy things at college, University, or indeed working show off their nice new Kia on a friday night? what self respecting sales rep puts a i10 or ceed on their want list as a company car? and how many fleet buyers are queuing up to buy them in quantity? Answer: Very few if any ! The young trendy types that can afford new or have generous parents all want 106’s, Corsa, 207’s, Fiestas etc: Sales Reps want the new Vectra or Mondeo, Golf etc: and fleet buyers, well, what they always want, more of the above.

      Kia and Hyundai know full well the age range and prioritys of the people who buy their product, and its not led by style or fashion, they dont care if it doesnt have any va va voom, or the drive of their life, or Kinetic Design, but they do care about practicality, and servicing costs, and being called Sir and Madam occasionally, they only drive 5,000 miles a year anyway so that seven year warranty not only grabs their attention like no other it makes pretty good sense for Kia as well, they dont expect high warranty claims, their product isnt going to be driven within an inch of its life at 70mph and above around the M25 everyday, its a no brainer, they cant loose! but more importantly Kia and Hyundai have pulled off the biggest trump card of all here, they have quietly been investing and improving their range to such an extent that they now have a seriously good product (and they know it) and its at the all important lower end of the price scale, and they are so confident in their product that they are able to offer a class leading Seven Year warranty that they just know is going to grab consumers attention, should other manufacturers be worried? in my opinion thats a big YES.

    Iain Ronayne

    A creative and hardworking professional focused on growing in the field of new media. Enjoying the convergence of my background in IT and the vibrant automotive industry and committed to engaging visitors and growing the Motor Trade Insider brand with unique content and fresh ideas.

    11 years ago Blog, Manufacturers, Scrappage, , , , , 79