The current new car shortage is a ‘good situation’ for dealers, the UK boss of one car company has said.
Kia Motors UK president and CEO, Paul Philpott, believes the shortages in new car supply is a positive thing for his dealer network, as it’s allowing them to change their business models and learn new ways of managing customers’ expectations.
‘We can’t brush this under the carpet – supply is tough,’ Philpott told Car Dealer.
‘If you’ve got demand exceeding supply, any economist will know that means prices will go up or your margins go up, which is good for us and the dealers.
‘It’s about managing a different process and not having a compound full of cards that you turn to and say: “Which one do you want?”
‘This is a good situation, but one that we’re having to learn new ways of doing business.’
Philpott said he believes the current new car supply shortage is ‘certainly here for the medium term, if not the long term’, with ‘below optimum stocking levels at least through the first half of next year’.
He said this inevitably means longer order banks, and puts a new spotlight on customer management.
‘We have to manage as effectively as we can those customers who are having to wait for our cars at the showroom floor. That’s frustrating – there’s nothing that a salesman likes more than to sell a car and be able to say: “We’re going to deliver it to you in two weeks”.
‘Historically, that’s what he’s learnt to say, and that’s changing. And you know, the way we remunerate sales staff within a short supply situation has to change too. And it’s all this learning that we are doing hand-in-hand with our dealers.’
Philpott was speaking as Car Dealer handed over the Manufacturer of the Year 2021 trophy – the top accolade in the annual Car Dealer Power awards. You can watch the full interview in the video at the top of this story.
The Korean carmaker took the top gong for the second year running, taking its total number of wins to six, and meaning it’s the most successful brand in the survey’s 10-plus years of running.
It received a mighty 96.5 per cent across 13 categories, one of the highest scores ever achieved, and beating German giants BMW and Mercedes-Benz to the spoils. Click the video above to see which other manufacturers Kia beat in this year’s survey.
The brand achieved near-perfect 99 per cent scores for warranty, but, perhaps more importantly during a Covid-affected car market, it got a 99 per cent score for accessibility to senior management.
‘There was no guidebook or instruction manual on how to manage a business through a global pandemic,’ said Philpott. ‘We’ve been through all sorts of times to work out what was the best thing to do. We haven’t got everything right but we’ve made the best decisions we could with the information we had.’
He added: ‘It’s been a rollercoaster, and I think we’ve learned a huge amount. I think this is evidenced by the last five months of performance – we’re coming out stronger and better able to service the customer.
‘Even in a short supply situation, our dealers are better able to make money from our franchise and profitability is running at record levels. And I think, despite all the challenges we face, our partnership is stronger than ever.’
He went on to say: ‘We’ve got every one of our franchise dealers through the last 18 months, which is something we’re incredibly proud of, and they’re now prospering off the back of our fantastic product range – perhaps slightly better supply than some other competitors are facing.
‘The future for Kia looks great – there’s EV6, which I think is a real game-changer for us, and new Sportage which has been the backbone of our franchise for the last decade.
‘Our dealers have a lot to look forward to.’