Photo: CBC Canada
It's that time of the year when car dealerships scramble to move as many vehicles as they can to meet their quarterly and yearly plans. However, Kia dealers in Canada are forced to do the opposite, as thousands of cars are placed in storage instead of being sent to customers. The reason is a bizarre attempt to game sales figures reported to Kia headquarters in South Korea.
Many carmakers and their dealers are preoccupied with their sales results toward the end of each quarter. December is more complicated, though, as salespersons usually scramble to sign as many sales contracts as possible to land that nice Holiday bonus. You get the picture: December is as busy as it gets at car dealerships, and everyone is doing their best to sell as many vehicles as possible.
Dealerships have to meet specific sales quotas to stay in the game, and they sometimes need to get creative to check those boxes in their contracts. Sometimes, this means pre-registering more vehicles than they can reasonably sell in December. This makes it appear that they sold more cars in the year, when in fact a big chunk of sales are completed in the following year.
However, Kia Canada went in the opposite direction, telling its dealers that they would not get the vehicles their customers were waiting for. Although these cars, many imported from South Korea, are already on Canadian soil, they will not be delivered to dealerships. Instead, they will be kept in storage throughout the country until the year ends. The plot was uncovered by CBC Canada, which obtained a video showing a Kia regional manager explaining the motives to more than 100 dealership representatives in Ontario during a November 17 video call.
Kia's central region manager, Vince Capicotto, told dealers that only a small part of the vehicles will be shipped, with the bulk remaining on various compounds until the new year. The reason for this is as bizarre as the decision: Kia Canada doesn't want to appear too successful to the company's headquarters in South Korea. The Canadians expect a tough 2024, and a strong 2023 sets high expectations that would be difficult to meet next year. This is why it delays sales to lower the 2023 results.
"With the global slowdown, Kia Canada wants to control wholesale and retail performance in 2023 to not show high over-achievement," Capicotto told dealers. "There's a high risk with over performance that Kia headquarters will not provide Kia Canada resources necessary in our budget for 2024 to have a successful year if we over perform for the balance of 2023 at too high a rate."
Apparently, Kia Canada has already hit its target of selling 84,000 vehicles in 2023. Surpassing it might make Kia headquarters in South Korea cut the marketing support, the Canadians think. Kia Canada declined to explain the move when requested by CBC, saying that it won't comment on "confidential internal business matters," including whether the information was accurate.
However, the train may have already left the station. Since the story has exploded in the media, I'm fairly certain Kia bosses in South Korea found out about the plot. With or without the marketing budgets, they are certainly not thrilled about the stop sales decision.
As you can expect, the dealers attending the video call with Capicotto were not happy about this either. Not only the dealers were hit, but also Kia customers, some of them waiting for more than a year to have their vehicles delivered. Some of them might have already walked away when they found out about the additional delays.
Dealerships have to meet specific sales quotas to stay in the game, and they sometimes need to get creative to check those boxes in their contracts. Sometimes, this means pre-registering more vehicles than they can reasonably sell in December. This makes it appear that they sold more cars in the year, when in fact a big chunk of sales are completed in the following year.
However, Kia Canada went in the opposite direction, telling its dealers that they would not get the vehicles their customers were waiting for. Although these cars, many imported from South Korea, are already on Canadian soil, they will not be delivered to dealerships. Instead, they will be kept in storage throughout the country until the year ends. The plot was uncovered by CBC Canada, which obtained a video showing a Kia regional manager explaining the motives to more than 100 dealership representatives in Ontario during a November 17 video call.
Kia's central region manager, Vince Capicotto, told dealers that only a small part of the vehicles will be shipped, with the bulk remaining on various compounds until the new year. The reason for this is as bizarre as the decision: Kia Canada doesn't want to appear too successful to the company's headquarters in South Korea. The Canadians expect a tough 2024, and a strong 2023 sets high expectations that would be difficult to meet next year. This is why it delays sales to lower the 2023 results.
"With the global slowdown, Kia Canada wants to control wholesale and retail performance in 2023 to not show high over-achievement," Capicotto told dealers. "There's a high risk with over performance that Kia headquarters will not provide Kia Canada resources necessary in our budget for 2024 to have a successful year if we over perform for the balance of 2023 at too high a rate."
Apparently, Kia Canada has already hit its target of selling 84,000 vehicles in 2023. Surpassing it might make Kia headquarters in South Korea cut the marketing support, the Canadians think. Kia Canada declined to explain the move when requested by CBC, saying that it won't comment on "confidential internal business matters," including whether the information was accurate.
However, the train may have already left the station. Since the story has exploded in the media, I'm fairly certain Kia bosses in South Korea found out about the plot. With or without the marketing budgets, they are certainly not thrilled about the stop sales decision.
As you can expect, the dealers attending the video call with Capicotto were not happy about this either. Not only the dealers were hit, but also Kia customers, some of them waiting for more than a year to have their vehicles delivered. Some of them might have already walked away when they found out about the additional delays.
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