Q&A with Kia Australia COO, Damien Meredith

Damien Meredith is driving one of Australia’s fastest-growing car brands.

Kia has grown from a bargain-basement hatchback specialist into a challenger for Ford, Hyundai, and Mazda on the back of its strong warranty and rapidly-improving range of cars.

It this year outsold its Korean development partner, Hyundai, in two consecutive months for the first time, and is preparing to roll out a range of updated or all-new cars later this year.

May and June were tough, but Mr Meredith argues things are still looking up.

Here, we talk about what’s coming for Kia, the appeal of its warranty, the move to online sales, and electric vehicles in Australia.

CarExpert: How’s life been for you? I can imagine you’ve been pretty flat out given everything that’s going on

Damien Meredith: We’re obviously pretty happy with how the first half of the year has gone.

The volume’s okay, the market share is okay for year-to-date. I just think there’s going to be a lot of variation in reporting in probably the next few months with manufacturers, mainly through supply.

I think supply’s going to be inconsistent for the majority of manufacturers, and you’ll see some ups and downs in regards to market. It’ll be an interesting six months.

CE: I was going to ask about supply. April was a really big month for Kia, before May and June were much tougher. Has supply played a role in that, are you struggling to get cars into Australia?

DM: I hate using supply as an excuse – I don’t like using excuses for anything to be quite honest, it comes to our performance. We were curtailed with tight supply in that period, but the good news is that we’re in good shape now.

We’ve got good shipments coming through this quarter, so we’re in effect nearly back to normal with our supply.

CE: Looking into the crystal ball is always dangerous, but you’re looking forward to hopefully bouncing back in July, and into the second half of the year then?

DM: Our quarterly supply of stock will be good, yes.

CE: That must be a relief from your end.

DM: It’s always a relief when you’ve got cars to sell.

CE: What drove such a massive April for you in a market and a month where so many other struggled?

DM: Ahh, basically what I said a minute ago. I said we were in a good position in regards to inventory, we had cars on ground, and our consistency through that with regards to our communication and our offerings, I think that helps a lot.

And I’m pretty confident this will help us this quarter. So I think you’ll see a lift in our market share from May and June, back to close to six per cent in this quarter.

I’m confident that we can not be in the same situation we were in April, but we’ll be back to what our normal level is.

CE: Kia’s been a good news story for quite a while now in what’s been a really tough market.

You’ve talked about consistency in your product and your messaging, what exactly about your product and what Kia is saying at the moment do you think people are most drawn to?

DM: First and foremost, we’ve got great product.

Second and foremost is that we have been able to tell people that we have got good product.

And thirdly I think seven year warranty, as I always say, it’s given people permission to look at our brand.

You put those ingredients together and if it’s a good mix, you get a pretty good result – and I think that’s what we’ve been able to do.

CE: The warranty conversation is a really interesting one, given Kia was one of the first…

DM: The first, Scott!

CE: The first, I stand corrected! The first to move to seven years, and the rest of the market has slowly moved to five.

Is the seven-year warranty still the advantage it once was in your eyes, or is there maybe a need to go longer?

DM: Good question. I think that it’s still very relevant, and I think what’s been happening in the marketplace is that a few of the top 10 manufacturers have been dipping their toe in and out of seven-year warranties over quite a long period of time.

As you know, Holden tried it and Honda tried it. A few other have tried it.

It think what it does is, that’s a confusing message. Getting back to that consistency again with our brand, you know that when you walk into a Kia dealership you know that you’re going to get a seven-year warranty.

It’s not going to be on sale, it’s not going to be part of a program – you know you’re going to get it. That certainty and consistency helps dramatically in the sales cycle, no question about it.

To answer your question, it’s still very important.

CE: You’re probably sick of being asked this, but do you think there’s a point where you’ll need to go longer? Or do you think seven is the right number for now?

DM: We’re always looking at whether or not it needs to be increased.

When and where… If the time comes that we have to do it, we’ll look at all the permutations and combinations, and if it’s the right time we’ll go.

If it’s not, well, we’ll just keep studying it, looking at what’s right for the consumer, what’s right for the market, and what’s right for Kia Motors.

CE: Are you starting to see with the longer warranty, and with the quality of the product, you’re getting more repeat buyers to the brand, and buyers who are more passionate about the brand?

DM: Well we’re only halfway through the seven years, so I can’t talk about those people – we’re actually six years through aren’t we, on October 1st it’s six years.

It’s probably a bit early to tell, but what I can tell you is that if you want to change the emphasis of a brand, you’ve got to give the customer, the consumer a reason to look at you.

Seven-year warranty we’ll be ever thankful for, because that’s what it’s done. If you look at the feedback we get from customers now, it’s: “I really love the car, it’s great, seven-year warranty was what really got me to look at the Kia product”.

I’ve said this a few times, but what we’ve got to do is, we’ve got to flip the equation from people saying, “It’s a Kia, I bought it because it’s got a seven-year warranty and by the way, it’s a great car” – we’ve got to get people saying, “It’s a great car, and it’s got a seven-year warranty”.

CE: What role has the Stinger played in that transition? It’s a unique car for Kia, and in Australia given there aren’t all that many powerful rear-drive sedans left

DM: We did 240 Stingers – 243, I think – last month. That was our biggest month ever.

There’s only one thing better than a duopoly and it’s a monopoly.

We’re really happy with what Stinger’s been able to do for the brand. It’s given us a sharpness in regards to performance that we never had before, and the effect that it’s had on the brand has been fantastic.

CE: There’s some really exciting new product coming in the next 12 months. To start with, when will the Stonic be touching down?

DM: We expect Stonic to be on sale later this year, the last two months of this year.

On sale November [to] December.

CE: Have you locked in a price range for the car yet?

DM: We think that it’ll be low-$20,000s.

CE: Is Sorento still due this quarter?

DM: We would expect new Sorento to be on sale in September, so that just sneaks into this third quarter.

CE: That must be a pretty exciting one, given the success of the outgoing model

DM: We’ve had a couple of pre-production cars here, and I don’t think I’ve seen more excited people than… our staff have a look at the car before it’s launched when they get the pre-production models out.

I think that this is the most excited I’ve seen them in regards to looking at a car. So it’s got high expectations.

CE: In terms of engine line-up, are we expecting to see the plug-in hybrid models and the hybrid models promised for Europe and Korea?

DM: It still hasn’t been decided, but we’ve certainly looked at both the hybrid and the plug-in at later dates during its lifecycle.

It hasn’t been decided whether or not we’ll go, but it’s certainly looked at.

CE: Is it a question of being able to build the business case, or is it a question of being able to get the car in right-hand drive?

DM: No no, we’ll be able them in right-hand drive, that’s okay. It’s really a pricing discussion to be quite honest.

CE: So, at the right price you see demand is there? I suppose Toyota has proven there’s demand for hybrids, it’s about getting the right sticker price…

DM: We’re pretty confident in our product. If we can get it in the right pricing so it can compete against other brands that have similar line-ups and similar products, we’ll certainly go.

It’s not a right-hand drive issue, it’s more a pricing issue.

CE: With the Rio and Picanto, in covering those cars we’ve talked about the fact they miss stuff Europe and Korea gets.

Is it frustrating for you not being able to source the cars with the latest tech, or are you comfortable with where they sit as cheaper, slightly lower-spec cars?

DM: I was waiting for a loaded question! I wouldn’t say it’s frustrating.

You’d be well aware that we put a lot of spec into our cars these days and charge what we think is a fair and reasonable price for it.

Probably a big part of the jigsaw puzzle of why we’ve been able to grow, and be more successful now than we were in years gone by.

No it’s not frustrating, and we select the specification for what we think the market wants, and then work out that sometimes difficult balance between specification and pricing.

We’ll always look at that balance. I think it would be fair to say we don’t quibble on safety with new product coming through, we’ve just always got to get that balance right. I’ve got a lot of faith in our product planning team, and our R&D in Korea to give us the right options.

CE: Would it be fair to say the Australian market, especially at that end, is more oriented toward price than features, given they are affordable cars?

DM: No, I think what’s happened over a long period of time is, people that are looking for those first cars – and I always use the example of your daughter going to uni for the first time – you’ve got to get that balance right in between safety, pricing, ‘it looks good mum and dad’, all those things.

If you get that mix correct, that’s where the sweet spot is. I think we’ve proven that, we don’t skimp in regards in specification when it comes to safety.

CE: Rounding out the new product coming, the new Carnival. Kia is a real success story in a shrinking market with the current Carnival, will the new model come in at a similar price to the current one?

DM: Pricing hasn’t been finalised on Carnival at this point in time, so it’s only early days in regards to how we’re going to position it.

But again, it gets back to specification and size. At this point in time, I would says it will see similar pricing strategies to the car. I don’t think you’ll find a big jump in that, but like anything if you’re adding specification the vehicle’s going to be more expensive.

We haven’t decided what our pricing strategy will be at this point in time with Carnival.

CE: Pivoting to electric vehicle plans, which is something you’ve spoken about quite a bit in the past. Where does Kia stand on getting the e-Niro to our market?

DM: I would have liked an EV range two years ago.

Unfortunately supply and government legislation are the drivers for Kia globally in that regard.

So if countries have legislation that requires EVs in that part of the world they get first dibs, which is fair enough, it makes sense.

We’re still working very, very hard to get an EV line-up going in Australia. I think we’re close, but it just hasn’t been finalised.

CE: In an ideal world, when could you have the car here?

DM: In an ideal world we could’ve had them here two years ago! [Laughing]

We would be looking at certainly 2022.

CE: So that’s been pushed back again since you last mentioned it

DM: I’m being conservative, because if I said next year and it doesn’t occur it makes me look at bit silly and a bit gung-ho.

In all seriousness, I think that we would like to have them next year. Whether or not supply allows us to do that is another question.

That can’t be answered 18 months, 24 months out from that situation.

CE: What needs to change in our market on the EV front? A number of carmakers are struggling with this, I know Volkswagen has been particularly vocal.

With ideal regulations, where would Australia be to drive the rollout of EVs?

DM: I think that a lot is going to change over the next few years.

Personally, I’d like to see some quantifiable measurements from the Government about where we need to be in 2025, 2030, etcetera, so that as manufacturers we can plan accordingly, and talk to our global head offices and say, “hey, this is what’s happening in Australia. This is what we need to do.”

I would prefer a lot more certainty than there is at the moment.

CE: The Government’s electric vehicle strategy will come out later this year, all things being equal, and presumably that will contain some of that detail…

DM: You’d think that from a Government point of view that, without having any local manufacturing now that it would probably be a bit easier to get the rules and regs.

Let’s hope so. Let’s hope it’s fair, let’s hope it’s consistent, and it doesn’t favour anyone – it’s good for the industry – and away we go.

CE: Have you seen much movement in attitudes from the Federal Government on electric vehicles? Because it was quite a politicised issue

DM: I think what happens in Australia, is those things get lost because we’re on a three-year cycle with elections.

Policy tends to get lost and the soundbites seem to drive the situation. I just hope that what you said before, that we get some clarity with the EV white paper and it shows a bit of leadership and direction – that’s all, so we know what’s going on.

What I’m saying to you is, the soundbites dominate the output. I think it might have been Michaelia Cash, was it, said the Labor Party’s trying to take your big four-wheel drives, your weekends etcetera.

Well, let’s just get some clarity so we know what to do with [electric vehicles] as an industry.

CE: Beyond that, are there incentives or other things you’d like to see the Government doing to drive electric vehicle sales, or would you like to see the market do that?

DM: I’m a great believer in the market needs to do that.

What’s I’d like to see in regards to product, I don’t want to see any incentive on product at all. What I’d like to see would be, I’d like to see the Government give direction in regard to policy and legislation, and second invest in infrastructure.

If we are going to be living in an electric vehicle world, we need infrastructure. Let’s get that right, and I don’t know the answer to this, but let’s work out what’s fair and reasonable for EVs to be running on our roads.

We don’t want a haves and have nots situation. Let’s get all those things clear and then as an industry we can make things better in regards to outputs, emissions, etecetera.

CE: When you mention the have and have nots, are you talking about a way of taxing them, like a road tax?

DM: That’s exactly what I’m saying. Do you really want a situation where you’ve got 10 per cent of the population driving around in EVs not paying… excise on fuel, and that creates a bit on angst when we don’t need to create angst.

CE: If we’re trying to drive electric vehicle uptake, do you think it’s reasonable to put a tax on that early on when they represent such a small fraction of the car parc?

DM: I’ll just go back to what I said. It think it has to be a situation with the haves and have nots.

Let’s get clarity from a governmental point of view about what they want to do.

Do I think it’s fair that there’s probably a couple of thousand people – maybe that’s being un-generous to Tesla – there’s people driving around in EVs at the moment that don’t pay any fuel excise. Is that fair, when they’re using roads?

We’ve got to get the balance right straight away.

CE: Your wish list for Australia, there’s a couple of cars revealed overseas that have been ruled out for our market. Is there any chance of getting the Telluride?

DM: No.

CE: They’re not going to build it in right-hand drive?

DM: They’re not going to build it in right-hand drive.

CE: Looking further ahead, a Kia ute is something the brand would obviously really like. Are plans still going ahead for that car?

DM: I’ve said a lot about the light-commercial range over the years. I think what we’ve got to do is, we’ve got to wait for what Kia Motors Corporation (KMC) as a global entity wants to do with that.

I can’t speculate whether or not that’s going to arrive tomorrow, the next day, or the day after that.

CE: It sort of sounds like a direction hasn’t been picked for the ute, or you’re not aware of what it might look like .

DM: I see a lot of photos but none of them come from KMC.

I’ve received no information about the ute at all. With our light-commercial range, as I said, I think we’ve got to wait for the direction of KMC on that.

That’s not saying I don’t wish we have them now.

CE: Any carmaker that says they don’t want a ute would be lying, given how popular they are…

DM: 25 per cent of sales last month were light commercials. That’s incredible, incredible.

CE: We’ve seen a number of brands build and advance the rollout of their online sales systems because people haven’t been able to go to dealerships. Is Kia working on that in Australia?

DM: We actually launched it last week, and we’ve actually sold as of Tuesday [07/07] we’ve sold eight cars.

CE: Is that a full build and price, where people can check stock?

DM: Check stock, no.

Build and price, yes.

CE: How does that process work, then. Do you mind rolling through quickly if someone was buying a car online what they’d do?

DM: Go to our website, see the micro page, hit it, away you go. You go step-by-step, you leave a $100 deposit and they can choose which dealer they want to deal with, and away you go. It’s pretty simple.

We’ve been pleasantly surprised at how well it went.

Last weekend was the first weekend, four cars were sold: two in Queensland, one in New South Wales, one in Victoria.

I’m a great believer in that wonderful setup between motor vehicle manufacturers and their franchise dealers, but necessity is the mother of invention, and what’s happened in the world over the last six months… you’ve got to be up to date with technology and what people require, what makes people feel comfortable with your brand.

If people want to buy over the net, we can satisfy that. I think that’s great.

CE: On the relationship between Kia and its franchise dealers, has the rollout been well received by the dealers you’ve spoken to so far?

DM: We did this hand-in-hand with the national dealer council to make sure they were comfortable with it.

Obviously circumstances make it obviously probably a little bit more acceptable for everybody at this point in time, so it’s got the blessing of the dealer network.

Kevin Hepworth, Kia Australia PR boss: The dealers are not cut out of this process at all. Once the person who’s been shopping leaves their deposit, the dealer then gets back in touch with them to complete the process.

The dealer is still technically part of the process, it’s just the difference is the customer makes their own decision as to when and where, and then whether or not they want to go to the showroom at all. It’s all in the customer’s hands, but the dealer is not cut out of the process.

CE: To wrap this up, Damien you’ve been in the business a little while now. What do you see as the biggest challenge for carmakers in Australia going forward?

DM: I think the biggest challenge is the, I’ll call it uncertainty – it’s probably not the right word, but I’ll call it uncertainty – about the direction of fuel-type vehicles.

Are we going EV? Is there going to be a mix? It always seemed strange to me that we’re surrounded by LPG, but we’ve never used LPG… well we have, but it hasn’t been the main driver.

We’ve got all these options, and I think that’s going to be the challenge over the next, probably the next five to 10 years. Which direction do we go? Is it EV, is it hybrid, etcetera etcetera.

I always use the analogy when there was two types of video, there was VHS and there was Betamax. Beta was a higher qualirty, but VHS was far easier to use, so VHS won out.

I think it’s exciting, and what manufacturers have to do is choose the right direction and they’ll be the winners.