Interview – Paul Philpott, UK president and CEO, Kia

Paul Philpott, the CEO and UK president for Kia

An Interview With The UK President & CEO of a Promising Manufacturer – Kia

KIA’S UK PRESIDENT and CEO Paul Philpott is used to success, having overseen the brand’s stratospheric growth over the past 12 years. Last month, he scored another win when he accepted the What Car? Car of the Year Award – a first for any Korean manufacturer – for the breakthrough success of the new electric e-Niro SUV.

It marked another triumph in a glittering career that has taken him from big roles in Ford and Toyota’s sales and marketing teams through to stints at Kia UK, Kia Europe and now as the first non-Korean to take over leadership of a region.

You’ve been at Kia for 12 years now, growing the brand and this year winning What Car?’s Car of the Year Award. How did it feel when you joined?

“The journey is incredible – and ongoing. I have a file at home of all the notes people sent me saying that I was mad to leave Toyota for Kia. We were selling 30,000 cars a year back then; last year it was 96,000. We’ve tripled our numbers and sit within 5 10% of Toyota and Nissan, and we can still see plenty of growth potential.

“I moved because I saw the entrepreneurial opportunity. I could see that Kia was very ambitious; it had just invested $1 billion building a plant in Europe, it had recruited Peter Schreyer as head of design and it had the confidence to offer a seven-year warranty. It demonstrated that it wanted to succeed.

“Those things combined made me think: ‘This is a good opportunity, and if it all goes wrong, I’ve got 10 years with Ford and 10 years with Toyota, so I’ll go and do something different’.

“The first few months were hard; there wasn’t really a strategy for growth in the UK or a core to the organisation, a brand strategy and so on. But that was the opportunity; I believed once those things were in place, the brand would grow.”

When momentum built, how far did you believe it would go?

“Early on, the biggest challenge was expectation. I think some people thought we’d succeed overnight. But the key was to get momentum: grow sales, grow profitability, get the trust of our shareholders, the retailers and so on.

“As that momentum came, the next challenge was to not bow to overambitious targets. I’ve always been asked when we’ll hit 100,000 registrations a year and I’ve never answered it. If you set targets like that, it’s too easy for people to say: ‘Let’s do some fleet business and get there earlier’. I’ve seen it happen, and it’s so damaging, because it’s not sustainable; it hurts you and your retailers if you expand only to contract, and it hurts owners, because it undermines resale values, on which so much depends.”

How do you push back against enforced targets, then?

“The senior management in Korea are hugely motivating in the way they leave us to get on with it. They ask us questions, they listen and they will put their point of view, but they will also be very respectful of ours. As the years of growth have come in, so we’ve gained a few more stripes; we can have robust discussions positively.

“They’ve invested in us, from our headquarters in Walton-on-Thames to all the factors that give us low staff turnover, low retailer turnover and more. Now people from Toyota will contact me and ask whether there are any jobs going. We’re in good shape, and nobody wants to damage that.”

‘Kia is a brand for everyone, perhaps in a way, few can copy’

What’s the ceiling for Kia?

“It’s probably around 120,000 units per year. So there’s probably another 20% growth. The risk beyond that is that your fleet-to retail mix starts to get out of kilter. We want 50/50 to maintain stability in the new and used car markets. If you upset the equilibrium, you start to cause issues for yourself.”

Where is Kia in the market?

“We’re a brand for everyone, perhaps in a way, few can copy. The ultimate expression of that is the Sportage, which we can
see from trade-ins is bought by people across the market, from premium cars to mainstream cars. It’s a car that can sit on any driveway and draw approving looks, and I think the same is true for our entire range.”

What’s Kia’s target for 2019?

“To grow by about 1% to 97,000 units. But we’ve had a good start to the year and we could exceed that if the market holds in the face of all the challenges for consumer confidence.”

Are online sales in the plan?

“We ‘ve held back on any online selling, because we want to use digital to drive people to our 192 retailers and then give the best brand experience possible.

“The key for me is customer service from the retailer. We can use digital to get people there, and with the products we have, delighting with service should be enough to result in sales.

“I believe anyone spending upwards of £10,000 wants an ongoing relationship with someone, and that means the retailer. If Apple still needs stores for products far simpler than ours, we need retailers.”

Has diesel’s decline plateaued?

“Possibly. Our model line-up now reflects consumer demand, in that there’s no diesel offering on the smaller cars but the option on the larger ones. Our diesel sales dropped 30% year on year in 2018, but the signs are that consumers are recognising the value in the right circumstances and that the market has adjusted.

“We’re also seeing used car values for diesel start to harden, which is interesting. It suggests
we’ve got to a level where there won’t be lots more decline.”

What about electrified cars?

“There’s real opportunity there, helped, of course, by the What Car? Award for the e-Niro. Last year, over 12 months, we sold 400 Soul EVs. Since opening the books for the e-Niro in the second week of January, we’ve taken 1000 orders. That’s a sign of how the market is moving.

“Demand for hybrids is also growing, and we have plug-in offerings for the Niro and Optima. Our fight is to get more production allocation, but I’m confident. Last year, we sold 6000 hybrid Niros; this January alone, we sold 1400.”

How big a deal is the What Car? Car of the Year Award?

“The What Car? Awards have the biggest impact on your reputation in the UK. They’re the ones that get the most coverage. They raise awareness among buyers and underline that the pride we have in our products is justified – and our retailers and customers get that message too.

“To be the first Korean brand to win and only the third non-European brand to win in 42 years is quite something. To have the first electric car to win is another statement. It really is a huge deal. It’s fantastic for our brand and our reputation and it sets a line in the sand for the journey we’ve been on over the past 10 years. Look down the list of past winners and we’re now promoted to a league we were aspiring to only a few years ago.

“This is the breakthrough year for electrification, and to be recognised as being at the forefront of that is a big deal.

“We’re at a tipping point with the technology and customer interest, and now we can capitalise on that.”

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