Kia moves to protect residual values

KIA Australia is preparing for the introduction of a guaranteed future value program to encourage customers thinking about spending up on the brand’s more expensive models, and shield buyers from depreciation.

 

The Korean brand confirmed it plans to add a guaranteed future value program at the launch of its most expensive model to date, the EV9 upper-large SUV, which starts from $97,000 before on-road costs and tops out at $121,000 + ORC.

 

Figures this high could alone be enough for buyers to think twice about their decision, as depreciation is the greatest cost of new-car ownership – and a moving target in the world of electric cars at the moment – but Kia Australia says it will look to ease the minds of customers with the option of an agreed buyback price program launching in 2024.

 

Kia Australia CEO Damien Meredith said the brand is keeping a close eye on new-car residuals, and will act accordingly for both fully electric cars, and also petrol, diesel and hybrid vehicles starting in 2024.

 

“In the short term we can only go on what is happening with our internal auctions within our dealer network,” he said of the current situation with resale sums.

 

“So right now the used car market has come back quite significantly, and we talk in percentages of recommended retail price. We're about mid-80s with all our product, and the EVs that have gone through are about three per cent less than – so about 82 percent of RRP.

 

“I think what's happening is the market’s working itself out at this point in time, and probably there's not enough critical mass out there to really give us an exact picture of what's happening with resale with EVs,” said Mr Meredith.

 

“To be quite honest, I don’t think anyone knows. I’d like to see what happens with ‘normal’ cars going into the future, but really we will just have to wait and see,” he said.

Dennis Piccoli, chief operating officer for Kia Australia, said the company is working on a guaranteed future value (GFV) proposition to help customers make the right call.

“What we're hearing is that the residuals and returns we’re getting out of the auctions, the sample size is quite small. It's better than what's out there in terms of the opposition from what we hear, but it’s like this with free markets, and it's likely to change,” said Mr Piccoli. 

 

“And it depends on, with EVs, what's happening in the market with some of the brands that are moving around their prices all the time. So it's pretty difficult.

 

“We're looking at it at the moment, so we're hoping to get to launch a program across all our range including ICE models, but at this stage it’s looking like quarter one, 2024.

 

“There will be a GFV on all of our product in the new year,” he said.

 

Exact details of the local plan are still to be confirmed, but it is expected to follow closely with Kia New Zealand’s so-called Kia Konfidence scheme, which is said to offer customers the ability to “know the minimum future value of your new vehicle before you drive it off the lot”. 

 

“Once you reach the end of your Kia Konfidence loan term, you can choose to retain your car, replace it or return it – it’s up to you.”

 

Customers who take up a loan through the business then have the choice of paying out the remaining amount on their loan to keep the vehicle, exchanging it for another new Kia at the agreed trade-in rate, or walking away from the car so long as the car meets the “Kia Konfidence Good Condition Guide” and the customer has complied with all agreement terms and conditions. 

 

Many other brands in Australia offer GFV schemes aligned to in-house financing, including VW, Mazda, Ford, BMW, Land Rover, Skoda, Volvo and Toyota.

 

Stay tuned for more details on the Kia GFV plan in early 2024.