Interview: Auto sales
Kia Motors --- Peter Buttefield --- America C.E.O.
>> hyundai affiliate key i can’t motors came out with second quarter earnings friday morning, reporting profit was unchanged from last year. net income at $159 million. the sales rose 14%. in early july, kia motors america announced a new sales record as its second consecutive month of record selling. they sold nearly 28,000 units, up 36% over the same period last year. my colleague, lane bajardi, discussed those numbers when he sat down with kia motors america c.e.o. peter butterfield.
>> we really did have a great quarter. we’ve consistently had growth since we came into the u.s. market 10 years ago and this year we’re up nearly 14% in the first six months and have found consumers really responding well to our product offerings.
>> mm-hmm. your u.s. sales for kia versus 50% for the past four years. the company has yet to establish a strong brand image in this market . how do you want the brand to be regarded by consumers? what should they be thinking of when they think of kia?
>> well, value number one, which we currently stand for, quality, number two, and safety, overall safety of the vehicle, number three.
>> mm-hmm. now it’s inexpensive comes to mind, certainly, whether it’s yours or your partners with hyundai or some of the other names at the lower end of the scale. and people often think of kia, first of all, as a low-priced product.
>> i think they did. keep in mind, kia is a young brand, only been in the u.s. market for 10 years and we entered with entry-level products. but our car brand features $10,000 entry-level rio up to the $25,000 or $30,000 monty on the car side. our average transaction price in the u.s. market is now approaching $20,000, which isn’t too far off the average transaction price in the car industry.
>> mm-hmm. sportage is one of the key names that you have had over the years and certainly on the entry into the u.s. market . is that going to be coming back anytime soon?
>> we’re glad to say that sportage is coming back this fall. it’s a unibody bruck a four-cylinder and six-cylinder engine and this is a product that’s delivered historically 50,000 volume to us which we haven’t had the benefit of the last two years. we are looking at the sportage to add another growth spurt to our company in 2005.
>> your sales are quarter of a million annually, close to the 300,000 threshhold that you mentioned for building your own factory in the united states. are you closer to taking this step here?
>> we’re certainly getting closer. we haven’t been shy about saying we believed in north american production in our chairman, chairman chung has stated his globalization strategy to builds products where the products are sold. we are closer to that point in time and we hope we can get to the 300,000-car level as quickly as possible.
>> following in the footsteps of the jam these automakers, they put their foothold as far as building u.s. plants, trucks in the united states. do you see yourself making a offering for a pickup truck plant in the united states?
>> we have expanded the car line to cover from the entry-level segment up into the premium sedan segment of large cars. so, we have most of the car segments covered. where we have opportunity from our product segment is in the truck segmentment we have a full-size minivan with a sedona. we’re coming back with a short wheel and long wheel base sedona. we have the mid sized sorento such and now we’re coming back with a small s.u.v. and there are opportunities for uses to expand.
>> how is demand? i noticed on your website, you’re offering $2500 cash back on a $13,000 car. why is that necessary at this point?
>> well, we have $1500 back on a spectra, and if you are an owner of a spectra, we have incentives to purchase another kia. if you look at the average rebates on the kia product lines, they’re well under the industry average for overall incentives.
>> how are july sales at this point as we get to the end of the month?
>> we’re having another good month in july. we had a terrific month in july 2003. we anticipate that we’ll about equal last july’s level this month.
>> when is the rebase train going to end with these incentives and rebays overall, certainly other automakers in this business rely even more heavily on them than you do. do you expect this to let up?
>> i don’t see it in the near future, frankly. rebates and incentives really have become part of the pricing model in the u.s. market today.
>> all right. there we have it. the c.e.o. of kia motors america. well, futures traders pared best that the 10-year treasury note will decline, according to the figures released from the chicago board of trade. the difference in the number of wagers by hedge funds and other large speculators on a decline in the 10-year note, compared with those on a gain, fell to 172,000 from 212,000 a week ago. also, for the week ending tuesday, speculators decreased their net-long position in crude oil futures. crude rose 5% this week. but gasoline traders increased their net-long position in new york gasoline futures during the same periods. gasoline rose 1.6% this week. net-long positions in heating oil also increased. heating oil gained little more than 2% for the week and turning to precious metal, speculators decreased their net-long positions there. gold prices eked out a gain for the week. as john kerry attempts the business of campaigning after receiving the nomination for president from the democratic ticket, business is preparing to attend to john kerry. we’re going to take a closer look at that next.
