New Kia vehicles that have arrived from overseas are sitting on a storage lot in Wolverton, Ont., purposely locked up even though customers have been waiting months and months — some well over a year — to get their vehicles.
The new cars are being withheld from Kia’s Ontario dealerships — and reportedly from many more across the country — as part of a controversial plan by Kia Canada to game the number of sales in the last six weeks of the year.
Go Public has obtained a video in which a Kia regional manager explains the scheme — passed down from top Kia executives — to more than 100 dealership reps in Ontario during a Nov. 17 video call.
“All of you are gonna be very unhappy with me today,” said Kia’s central region manager Vince Capicotto as he outlined the plan, which he said would roll out nationally.
Instead of shipping all the vehicles to dealerships, Capicotto told the dealers only some will be released — the rest will remain on various compounds until the new year.
The reason for this, he explained in the call, is to avoid appearing too successful in the eyes of headquarters in Korea.
“With the global slow down, Kia Canada wants to control wholesale and retail performance in 2023 to not show high over-achievement,” he said.
“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.”
According to Capicotto, Kia Canada has hit its target of selling 84,000 vehicles for 2023. He said there was concern that if sales continued to go well, headquarters would decide Canada didn’t need marketing support in the new year and would cut back on that.
An unusual strategy
An auto expert says it’s a very unusual move for Kia Canada.
“It is normal for automakers to use creative strategies at the very end of the year,” said Shari Prymak, senior consultant at Car Help Canada, noting this includes pre-registering vehicles toward the end of the year so they can show higher sales.
“Usually, those strategies are to help increase sales, not reduce them,” he said.
Capicotto did not respond to Go Public’s request for an interview.
A spokesperson for Kia Canada declined an interview request, and declined to answer many of Go Public’s questions. In a written statement, she said she could not comment on “confidential internal business matters,” including whether the information was accurate.
She also wrote that the company is committed to ensuring “timely delivery” of customer orders “in 2023 and beyond.”
She did not explain how “timely delivery” coincided with deliberately withholding vehicles from sale.
A spokesperson for Kia headquarters in Korea said in an email that the company’s official position “has been shared” by its Canadian colleagues.
Kia employees decry ‘lack of respect’
As Capicotto delivered the news, Kia employees on the conference call — their microphones muted — started to type comments in the chat box.
“I’ve been with the brand since 2004,” wrote one person. “This is the first time I’ve seen the dealer body penalized for selling too many vehicles.”
“This shows a complete lack of respect for every dealer in Canada … and our customers,” wrote another. “No sold units should ever be held, they should be expedited.”
Another employee dismissed the scheme to secure more marketing support in 2024. “We don’t need marketing,” he wrote. “We need cars.”
Capicotto read each comment out loud and addressed them.
“This is not going to be great, no matter how you look at it,” he said, stressing that the move to hold back cars until the new year is about a longer term plan.
“This is about thinking not just about today and this month, but also about the next few months and the next quarter ahead.”
One Ontario Kia manager Go Public spoke to said the squeeze on car inventory right before the holidays is a tough financial burden for all kinds of staff at dealerships. CBC is not identifying him because he fears professional repercussions.
Franchise owners will, of course, make less money, he said, and sales staff heavily rely on commissions — which only materialize once a customer receives the vehicle and pays in full. People working in the parts and service departments, he says, will also feel the ripple effect.
“You go home and you tell the family that you’re losing a considerable amount of money for the next two months,” he said. “I could be [doing] better.”
He says he’s already had customers who’ve paid a deposit walk away when they learned of the additional delays.
“Last week alone we lost three sold orders,” he said, shaking his head.
He says working at Kia has been almost four years of frustration, since early 2020.
Some 30 rail blockades swept the country in February of 2020, halting freight traffic in many parts of the country.
Then the pandemic hit and supply chain issues — such as a shortage of semiconductor chips — severely affected the availability of inventory for all car manufacturers. Kia has experienced shipping problems, and a two-week port strike in Vancouver this July froze all freight traffic.
“Now we’re going to come up with some boneheaded idea that we’re just going to … leave them all rotting [on compounds] until the new year,” he said. “Does that make sense? That is the worst.”
He said the plan to deliberately withhold cars from sale may be the final straw — he’s considering leaving Kia in the new year.
On the November video call, many employees wanted to know how to explain Kia’s decision to keep cars on the compound to their customers.
“Can we just tell people there was a fire at the factory?” joked one employee.
Capicotto said it was up to dealers what they would tell customers, but he modelled some wording that didn’t mention the internal strategy.
“Mr. Customer, we’ve just been communicated that there’s been … delivery delays and logistics delays at Kia Canada,” he suggested.
‘What they’re doing is wrong’
Brian Olmsted put down a $500 deposit for a Kia EV6 in June 2022.
The Toronto resident says he’s contacted his dealership every few months to see how much longer the wait will be, and fully expected to have his car by now.
Go Public told him about Kia Canada’s plan to withhold new cars from being shipped to dealerships.
“I’ve been waiting for a car for a year and a half and they’re holding them on a compound just to make the sales look lower?” he asked. “What the hell?”
Olmsted says he’s driving a 17-year-old car that’s on its last legs and worries it will die before his new vehicle arrives.
“This is so disappointing,” he said. “What they’re doing is wrong.”
Kia customers already endure some of the longest wait times in the industry, according to car expert Prymak, who called it a major problem.
“There might be some valid reasoning behind [the plan] from Kia Canada’s perspective, but ultimately it’s not right to make customers wait even longer when they’ve already been waiting for so long and dealing with quite a bit of frustration.”
Prymak predicts Kia’s supply shortage will continue for some time.
“It’s not as though Kia has the ability to provide cars to everyone overnight and make the shortage go away,” he said. “That’s not going to happen, regardless of their decision.”
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