Carmakers can always fight for showroom attention with offerings with better looks, specs, or prices; but at the end of the day, it’s having strong banking partners that will help win customers. Just like the vast majority of car brands locally, 70 percent of Kia buyers rely on financing to seal the deal. The economic slowdown brought on by the pandemic, and the subsequent tightening of banks offered a valuable lesson to the Ayala-backed Korean auto brand.
During the height of the community quarantines, banks and other lending institutions offered “payment holidays” rather than letting customers default on their loans. Regardless, the default rate remained high, and this resulted in banks having to tighten access on several loan products, including those associated with cars.
“The days of getting a 24-hour approval for a car loan is over,” says Kia Philippines president Manny Aligada. “Now, you’ll be happy to get your loan approved in three days. Normally, the timeline now takes anywhere between a week to a month.”
With private buyers (non-fleet) still making up most of Kia buyers, this development made the marketplace challenging for Kia—as evidenced by their 57.6 percent decline compared to 2019. However, it also gave them the chance to re-focus their strategy for 2021 forward.
“We will be veering away from offering zero downpayment on our vehicles,” says Aligada. “Having a customer drive home a car without paying for anything sends out the wrong signal. This typically leads to a high level of loan default and repossession.”
Instead of catching a wide net to capture all sorts of financing customers, Aligada and his team will now turn their attention on lower risk clients. Not only will this protect their bank and financing partners, but it will become valuable in terms of brand building.
With that, their financing options will now be centered around those who have the ability to pay long term (and pay off their entire car loan), but simply need a helping hand when it comes to their monthly cash flows. This means their offerings will be limited to the likes of light monthly payments or zero percent interest for lengthier terms.
This year, Kia Philippines’s messaging will be one of optimism and recovery. As they target a triple-digit growth this year, it starts with the “My Year, My Kia” initiative which will veer away from loudly promoting financing offers. Instead, it will showcase the styling, quality, and technology of their vehicles—particularly the Soluto, Seltos, and Stonic.
Towards the early second half of the year, Kia Philippines will be unveiling the all-new logo and tagline which would shift their positioning from a “value-for-money” to a “valuable” brand.
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