BLM interview with KIA UK CEO Paul Philpott
Business Leader Magazine recently sat down with KIA UK CEO, Paul Philpott, to discuss their financial figures, their growth over the last decade and their upcoming sports car.
Can you tell our readers about Kia Motors and your role within the company?
Kia is part of the Hyundai Kia motor corporation, which is the fifth largest automotive manufacturer in the world. We are a subsidiary of Kia Motors. We’re responsible for the sales of new Kia cars, the post-purchase service, the provisions of parts and accessories, and the ongoing sale of used cars.
We started selling cars here in 1991, so Kia is sort of the new kid on the block. Ford and Mercedes have been selling cars in the UK for over 100 years but we’re only in our 26th year.
One of our big responsibilities over the last decade has been to increase awareness of the Kia brand as a manufacturer of well-designed, quality cars.
We import cars, we don’t produce them here in the UK. Our European production plant is in Slovakia and about 60% of our sales are sourced from Slovakian production. The other 40% are sourced from production plants in our home country of South Korea.
We sell cars through 189 franchised dealers across the country and all of those are independent businesses. Our role is mostly about sourcing the right products from Kia globally and then selling these to our franchises, who then sell them on to end-users. These end-users can be both fleet and retail customers.
10 years ago we were a pretty small brand. In 2007 we were selling about 30,000 new cars a year and that gave us a market share of less than 2%. This year we will sell about 90,000 new cars: we’ve tripled the size of the UK Kia business in the last decade.
Can you tell us about your day-to-day role?
My responsibilities are to report to our European head office in Frankfurt and to our global headquarters in Seoul in South Korea. I also have to deal with franchise dealers – those with whom we have a contractual agreement. There are 189 of them and I have to keep their confidence levels up, showing them that they should be investing in Kia in the long term.
I also have responsibilities towards our 158 employees – 110 of which are based here in our Walton-on-Thames office. The rest are out managing the day-to-day relationships with about 15 or 16 of the dealers across the country.
I see my role as setting the vision for Kia across the country – asking where we want to be and reflecting the global direction of the company. I strive to make the Kia brand attractive to customers and to make it an appealing investment for franchise businesses.
Earlier this year we received a press release stating your first quarter results were up 23%. What have been the key factors in helping you to achieve those figures?
The first quarter was a very strong quarter – if you look at the total car market it was a record quarter and March was the biggest month in the history of the UK motor industry.
This was mostly because the government increased the vehicle excise duty and car taxes on April 1st. This meant that a large number of customers decided to complete their sale in the first quarter instead.
Obviously, this also meant that the market was not as buoyant in the second quarter.
As I said earlier, in the last decade our annual sales have increased by around 60,000 so as a company we do have good growth momentum at the moment. More people are becoming aware of how good our products are and of how high-quality they are. This is also backed up by our industry-leading, 7-year manufacturer’s warranty. This gives us good momentum in the marketplace.
Secondly, in the first quarter of last year we also launched four new products. We launched the new Sportage, which remains one of the top-selling SUVs in the marketplace; our first hybrid car – we also have a good order bank for that going forward; our new Optima – a large saloon car; and our new Rio, which is a supermini. These new products have really helped us to grow.
23% growth in the first quarter was also helped by the fact that that period of time was a boom for car sales generally. The car market was up 6% in this quarter.
Can you tell us more about your green car road map plans for the next five years?
Environmental protection is now a major and very significant driver of our business. We all have, as global car manufacturers, CO2 targets to achieve. Each manufacturer in Europe has to achieve an average of 95g of CO2per vehicle by 2020, and an average of just 75g by 2025. All of this has kickstarted green roadmaps.
For us, this began with our first electric vehicles: we brought out our Soul EV about two years ago, we then began selling our hybrid car – the Niro hybrid – which came out in the third quarter of last year.
We also now have our Optima Plug-In Hybrid (this is somewhere between an electric car and a hybrid car) and in quarter four of this year we’ll add to this collection with plug-in hybrid versions of Niro and of our Optima Sportswagon. By the end of the year we will have five electrified vehicles.
I would also like to point out that we’ve been working hard to make our diesel cleaner. Our Euro 6 Diesel cars are now significantly cleaner than older cars and we’ve also been producing low-displacement gasoline engines.
Going forward, we are rolling out electrification across most of our car lines. By 2020, we will have no fewer than fourteen so-called ‘green’ or ‘electric’ cars. It’s all changing very quickly.
You recently commissioned a report on what the motoring landscape will look like in twenty-five years’ time. What are some of the key developments predicted by the report?
In the next few years the automotive industry will see more change than it has done in any period before. It will change in three main areas.
The first is environmental protection, the second is connectivity – soon cars will be connected, at all times, to a communications infrastructure – and the third is autonomous driving.
We’ve enjoyed producing cars at Kia for over twenty years and what we want to understand is how new technologies will come together to create a car we don’t have to drive. The report says that this will be an evolution rather than a revolution. At the moment there are 30 million cars on UK roads and they’re all being driven by an individual and so the transition to cars which are driven autonomously will probably be a gradual one.
However, automotive technologies are already available on some Kia cars. For example, automated emergency braking. My Kia Sorento also has a self-park function, meaning that I can press a button and it will parallel park into a space just as well as I can.
These technologies already exist but we need to bring them together and work as an industry to facilitate and manage the transition from driven to driverless cars. The report says it won’t be until after 2030 that driverless cars – i.e. cars in which you can pass over total control to the vehicle – will become commercially available.
The report also points out that computers can avoid collisions far more effectively than humans can. The report stated that for every 10,000 accidents caused by a driver there will be only one accident caused by an automated car.
Modern technology is also becoming increasingly focussed on connectivity and, with this feature, we can help traffic avoid congestion hotspots. This will also tie in with environmental protection by helping cars to spend less time on the road.
By 2040, it is expected that automated cars will make up roughly half of all new vehicle sales. How they will then fit alongside cars being driven by you or I is very much up for debate.
In terms of the fleet market, how much of a disruptive influence will technological advances have over the next five to ten years?
I think the term ‘disruptive influence’ is a bit of an oxymoron when talking about technological advances.
I think that appropriate use of connectivity could be very useful for fleet managers; it will help them to monitor when cars need servicing and they can also keep a check on drivers’ behaviour to see how well a driver is representing their brand.
Connectivity can be a positive force in the fleet market, provided it is used in an appropriate way.
As far as alternative fuels are concerned, I think that the evolution of hybrid and plug-in electric cars could be just as good for fleet buyers as they are for retail customers.
We’re seeing a very strong demand from fleet buyers for our Niro hybrid because they want to provide their drivers with a great looking, low-cost car, which allows them to benefit from tax incentives the government have put in place.
How do you ensure that you build the right team? What sort of skills do you look for?
In any organisation, having the right team is critical. I am one person and I can set out visions, strategies, and some direction but the value of my management team, who manage all our other people as well as relationship with our franchises, cannot be overstated.
When establishing a team, the first thing I look for is a variety of people with different skills and differing ways of approaching the business.
I’ll use a football analogy: over the last couple of seasons we’ve seen Manchester United flounder despite having a team of stars. These people don’t gel well together as a team. It’s important to have a team of individuals who share a common goal but can offer different approaches to achieving this.
First and foremost, I want my team to be passionate about our business and about our brand. They need to be good communicators and must be able to influence and motivate the people who work with them.
How would you describe your management style?
I’m open and honest. What you see is what you get. I’ve got over thirty years’ worth of experience in the automotive industry now: I’ve worked with a major American brand, a major Japanese brand, and a South Korean brand. I also worked in our European head office in Frankfurt for three years.
I think I encourage people to have a go and to contribute to discussions. People are allowed to make mistakes provided they learn from them and do not continuously repeat them. When I started at Kia I also set out to learn everyone’s name: I think that sort of thing makes a huge difference and encourages people to feel engaged and included in the company.
I want people to have a career at Kia, I don’t want them to see it as ‘just a job’.
What do you think makes a good manager?
Consistency. If you’re one thing one day and something else the next people never know where they stand.
If you’re a business leader you have to set out a clear vision for the company – people need to know where the company is going. I think the ability to make tough decisions but be fair is also important.
You must value each individual’s efforts. You must be energetic, approachable, and motivating.
What is the best piece of business advice you’ve ever received?
The best piece of advice I’ve ever received was given to me when I was at Ford. I was in my first managerial position – I had four or five people working for me – and my boss said to me ‘what you need to remember is that, as a manager of people, your people are always watching you.If you’re having a bad day and you walk into the office and show it, people could make assumptions about how well the company is doing, about how safe their job is. People are looking to you as a role model and for confidence.’
He told me that, if you’re ever driving into work and are dreading the day ahead, just give yourself a couple of minutes in the car park to calm down. Give yourself a pep talk and boost your own morale, because as soon as you walk into the office you are on show.
What’s next for Kia motors? How are you going to expand your UK presence and your range?
Kia continues to be an exciting brand to be a part of. Our Korean board remain very ambitious despite today’s world being slightly more uncertain than it was a few years ago. I have been with Kia for just over ten years and I can safely say that the future today is looking just as exciting as it did in the past.
The SUV market has seen a lot of growth in the past three years and it is due to continue growing in the future. Now we’re launching the Kia Stonic, a small SUV which has received widespread applause for its design and its quality, into this market.
Towards the end of this year, we will also be making our first foray into the sportscar market. Unless you’re a dedicated sportscar brand, like Ferrari or Lotus, sports cars are generally manufactured in relatively small volumes, but what they say about the power of your brand is incredibly important.
The Kia Stinger will have 365 brake horsepower – the fastest Kia ever produced – but, more importantly, it makes a statement about our engineering. It says that our brand is exciting. We will be launching the Stinger at the end of 2017, in quite a limited volume, and we believe it will help change people’s perceptions of the Kia brand.
Alongside those two exciting products we will also be expanding our green car line-up with plug-in hybrids and another electric vehicle next year.
In a tough marketplace with economic and political uncertainty, having a very exciting product story puts us in a great position to continue our growth momentum.