Brasil Presentation 2006

SERVICE CONFERENCE 2006

ORLANDO, FL, USAJULY, 2006

KIA MOTORS DO BRASIL

José Alli Essmael Filho, Technical Manager

SUBJECT:

Based on 2005-2006 CSI results

“CSI IMPROVEMENT – CASE STUDY”

1) IDENTIFYING CAUSES OF LOW CSI

Presentation structure:

2) UNDERSTANDING KIA BUSINESS

3) CSI IMPROVEMENT STRATEGIES

4) RESULTS AND IMPROVEMENTS ACHIEVED

1) 1) IDENTIFYING CAUSES OF LOW CSIIDENTIFYING CAUSES OF LOW CSI

STEP 0: “HOW TO IDENTIFY REASONS FOR LOW CSI STEP 0: “HOW TO IDENTIFY REASONS FOR LOW CSI SCORE ?”SCORE ?”


Considering different point of views

CUSTOMER VOICECSI resultsCall Center statistics

DEALERS VOICEDealer interviewTSI resultsField engineer report

DISTRIBUTOR VOICEInternal meetingsHistory analysisLocal brands benchmark

““MAIN REASONS FOR LOW CSI SCORE”MAIN REASONS FOR LOW CSI SCORE”

AFTER GATHERING INFORMATION FROM DIFFERENT SOURCES...

1) DEALERS FACILITIES ARE POOR AND NOT 1) DEALERS FACILITIES ARE POOR AND NOT FRIENDLYFRIENDLY


2) MANPOWER QUALITY IS INADEQUATE2) MANPOWER QUALITY IS INADEQUATE

3) CUSTOMERS DON´T FEEL VALUED BY KIA3) CUSTOMERS DON´T FEEL VALUED BY KIA

2) 2) UNDERSTANDING KIA BUSINESS BY UNDERSTANDING KIA BUSINESS BY 20042004

WHOLESALES DROPPED WHOLESALES DROPPED 86%86% FROM 2000 TO 2004 FROM 2000 TO 2004

KIA BUSINESS SHRANK DUE TO SALES DROPKIA BUSINESS SHRANK DUE TO SALES DROP


15,4015,4000

YEAR 2000YEAR 2000

2,1402,140YEAR 2004YEAR 2004

20% OF DEALERS HELD 80% OF SALES20% OF DEALERS HELD 80% OF SALES






15 15 SALES/MONSALES/MON

THTH==

22SALES/SALES/MONTHMONTH==




LESSON #1:LESSON #1:

““WHEN MARKET BECAME MORE COMPETITIVE, WHEN MARKET BECAME MORE COMPETITIVE, PARTICULARY DUE TO PREGIO MARKET PARTICULARY DUE TO PREGIO MARKET SHRINKAGE, MOST DEALERS WERE NOT SHRINKAGE, MOST DEALERS WERE NOT PREPARED FOR THIS SITUATION. ” SO WE CAN´T PREPARED FOR THIS SITUATION. ” SO WE CAN´T MAKE IMPROVEMENT PLAN EVENLY FOR ALL MAKE IMPROVEMENT PLAN EVENLY FOR ALL DEALERS. DEALERS.

DEALER EVALUATION REQUIREMENTS BECAME EXCESSIVEDEALER EVALUATION REQUIREMENTS BECAME EXCESSIVE



DEALER EVALUATION REQUIREMENTS WERE CONCEPTED FOR MINIMUM RETAIL SALES OF 240 VEHICLES/YEAR. SO OUR STANDARDS ARE NO LONGER APPLIED TO NEW SITUATION.

HISTORICALLY, COMMERCIAL VEHICLES HOLD 75% OF TOTAL HISTORICALLY, COMMERCIAL VEHICLES HOLD 75% OF TOTAL SALESSALES

KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELSPASSENGER AND SUV MODELS


Facilities requires larger areas

Technicians are skilled in diesel

Customers demmands are different

For commercial vehicles:

Knowledge in electronics is not mandatory

PREGIO WAS BEST SELLER EVERPREGIO WAS BEST SELLER EVER



Market for vans shrank to the government restrictions

Competition became stronger and varied

Finally, Pregio production is interrupted

DEALERS START TO DEAL WITH MORE DEMMANDING CUSTOMERSDEALERS START TO DEAL WITH MORE DEMMANDING CUSTOMERS



More expensive cars attracted more sophisticated customers

Appearance, organization, cleaning and behaviour became more relevant issues

What pleased commercial vehicles customers may not work with new customers

SKILLED STAFF FIRED OR REPLACED BY LESS QUALIFIED PEOPLESKILLED STAFF FIRED OR REPLACED BY LESS QUALIFIED PEOPLE

PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVERPERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER


Skilled staff became expensive as sales decreased

Unexperienced technicians were hired to reduce workshop costs

Training efforts were not so effective as new employees could not follow high level instructions

TECHNICIANS AVAILABILITY FOR TRAINING IS LOWTECHNICIANS AVAILABILITY FOR TRAINING IS LOW



Workshop staff reduced for cost cutting

Every technician become overloaded

In some dealers, one technician may mean 50% of workshop staff

Training costs for dealers become significant

DEALERS SPENT LESS MONEY TO KEEP FACILITIESDEALERS SPENT LESS MONEY TO KEEP FACILITIES

DEALERS INVESTMENT IN KIA DECREASED DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY)(MOST DEALERS WERE NOT MAKING MONEY)


Dealers cancelled most facilities maintenance

Building front appearance has become poor and wrecked

Lesson #2:

“EVERYBODY WANTED TO MAKE MONEY

BEFORE MAKING ANY IMPROVEMENT,

WHEN ACTUALLY, IMPROVEMENTS WERE

NEEDED TO BRING MONEY BACK .”

IMPROVEMENT PLANS SUGGESTED BY KIA NOT COMPLIED BY IMPROVEMENT PLANS SUGGESTED BY KIA NOT COMPLIED BY DEALERSDEALERS



Improvement plans were based on former Dealer Evaluation Form

Long-term and comprehensive plans were firmed between Kia and dealers

Plan follow up only in every Field Engineer visit to dealer (1 or 2 times a year)

Each Improvement Plan has about 40 items to be complied by dealer in 8 months (in average)

LOSE-LOSE GAME...LOSE-LOSE GAME...



SALES SALES DROPDROP

STAFF STAFF CUTCUT

STOP STOP TRAININGTRAINING

CANCEL CANCEL INVESTMENTINVESTMENT

IGNORE IMPROVEMENT IGNORE IMPROVEMENT PLANPLAN

LOW PROACTIVE SUPPORT FROM KIA TO CUSTOMERSLOW PROACTIVE SUPPORT FROM KIA TO CUSTOMERS

CUSTOMERS WERE NOT TOUCHED BY KIACUSTOMERS WERE NOT TOUCHED BY KIA


Relationship between Kia and customers ended after car sale

Communication resumed to customer complaint to Kia Call Center

Although customers always could count on

Kia support, they expected more – they wanted

to be more valued as a Kia customer

DIFUSE COMMUNICATIONDIFUSE COMMUNICATION

POOR COMMUNICATION BETWEEN KIA AND DEALERSPOOR COMMUNICATION BETWEEN KIA AND DEALERS


Several ways of entry caused missing information

Targeted people often not reached

Service information found in several sources – not concentrated

Lesson #3:“COMMUNICATION IS IMPORTANT BUT THERE MUST HAVE A FLOW .”

3) 3) CSI IMPROVEMENTS STRATEGIESCSI IMPROVEMENTS STRATEGIES

NEW DEALER EVALUATION FORM ESTABLISHEDNEW DEALER EVALUATION FORM ESTABLISHED



22EVALUATION EVALUATION

AREASAREAS

BEFOREBEFORE

Facilities

Tools

55EVALUATION EVALUATION

AREASAREAS

AFTERAFTER Facilities

Tools

Organization

Personnel

Service Marketing

323 ITEMS323 ITEMS161 ITEMS161 ITEMS

Evaluation focus

changed from

“Quantity” to

“Quality”



REGULARREGULARIMPROVEMEIMPROVEME

NT PLANNT PLAN

EMERGENCYEMERGENCYIMPROVEMEIMPROVEME

NT PLANNT PLAN(BASED ON (BASED ON

NEW NEW EVALUATIOEVALUATIO

N FORM)N FORM)

AFTER 6 MONTHS... GOOD GOOD

OPERATIONOPERATION(10 (10

DEALERS)DEALERS)

UNDER UNDER RECOVERYRECOVERY

(23 (23 DEALERS)DEALERS)

NONOIMPROVEMEIMPROVEME

NTNT(33 (33

DEALERS)DEALERS)

CASES DELIVERED TO CASES DELIVERED TO KIA TOP MANAGEMENT KIA TOP MANAGEMENT

FOR LEGAL ACTIONSFOR LEGAL ACTIONS


DEALERS NOMINATION PROCESS BECAME STRICTERDEALERS NOMINATION PROCESS BECAME STRICTER



Only candidates with recognized experience are accepted

Technicians must be trained before opening

Candidate must comply with all requirements with no concessions

Dealer Pre-Opening Procedure for After Sales is established

All requirements are based on new Dealer Evaluation Form

SOME EXAMPLES OF DEALERS RECENTLY NOMINATEDSOME EXAMPLES OF DEALERS RECENTLY NOMINATED


3) 3) CSI IMPROVEMENT STRATEGIESCSI IMPROVEMENT STRATEGIES

PRE-REQUIREMENTS FOR MODELS SALESPRE-REQUIREMENTS FOR MODELS SALES



To be able to receive a model for sale, dealer must comply with To be able to receive a model for sale, dealer must comply with following requirements:following requirements:

Hi-Scan Pro must be available and updated

SST set for new model must be acquired

Best technician must attend new model training

TECHNICIAN RECONIGTION PLAN INTRODUCEDTECHNICIAN RECONIGTION PLAN INTRODUCED


Trainee, Certified, Expert and Master are 4 TRP grades

To be upgraded technician must be approved in a test

All technicians (204) are graded according to their experience

Skilled technicians were preserved Skilled technicians were preserved after Kia have endossed their after Kia have endossed their knowledgeknowledge


REGIONAL TRAINING OFFER INCREASEDREGIONAL TRAINING OFFER INCREASED


Kia increased Regional Training offer from 2 to 6 a year

By this, dealers from North, Northeast and South areas (far from Kia Training Center) could reduce training costs up to 80%

Field engineers were prepared to give OJT training Kia offer annually 240 hours of Regional Training, besides those of OJT training


TRAINING QUALITY IMPROVED FOR BETTER EFFICIENCETRAINING QUALITY IMPROVED FOR BETTER EFFICIENCE


Regular training offer increased

Kia Training Center fully equipped attracted technicians and improved practices quality

2003200380 80

TRAINEESTRAINEES

20052005224 224

TRAINEESTRAINEES


SKILL CUP AS A MOTIVATION TOOLSKILL CUP AS A MOTIVATION TOOL


Skill Cup introduced in 2004

Since then we gathered best technician to compete for National contest


Prizes and national recognition has become excellent motivation for technicians

MORE ACHIEVABLE DEALERS IMPROVEMENT PLANSMORE ACHIEVABLE DEALERS IMPROVEMENT PLANS


New Dealer Improvement Plan model is shorter and objective

A low-medium investment is demmanded


Emergency actions – cleanliness, painting, organization – are prioritized These short-term plans are checked every three months at latest – they are named “Quarterly Improvement Plans”

MORE ACHIEVABLE DEALERS IMPROVEMENT PLANSMORE ACHIEVABLE DEALERS IMPROVEMENT PLANS



FORMER FORMER PLANPLAN

ITEMSITEMS 4040

PERIODPERIOD 8 MONTHS8 MONTHS

COMPLIANCECOMPLIANCE 20 ~ 25 %20 ~ 25 %

NEW NEW PLANPLAN

1212

3 MONTHS3 MONTHS

65 ~ 75 %65 ~ 75 %

ACT SMART CAMPAIGN IMPELLED DEALERS AND EMPLOYEES TO ACT SMART CAMPAIGN IMPELLED DEALERS AND EMPLOYEES TO CHANGESCHANGES


Act Smart Campaign is very effective in dealers keeping and recovery process

200320038 8

DEALERSDEALERS

2005200524 24

DEALERSDEALERS

Dealers and employees are proud of improvements they make

Number of participants increase year by year


KMB awarded with bronze medal for its participation in last A/S campaign

INCENTIVES FOR HI-SCAN PRO AND SST AQUISITIONINCENTIVES FOR HI-SCAN PRO AND SST AQUISITION


KMB divided SST and HSP payment to help dealers acquisition


No profits on SST, HSP or any material sale to support service operation

As a result, all dealers are now equipped with Hi-Scan Pro and most dealers own full set of SST (211 item in total)

KIA CUSTOMER FOLLOW-UP SYSTEM INTRODUCEDKIA CUSTOMER FOLLOW-UP SYSTEM INTRODUCED


KIA designed a follow-up system for dealers to hear their customers

Customer receive a follow-up phone call up to 2 days after service done


Actions taken by Service Manager are monitored by KIA

This apparently simple action has a very positive impact among customers

SERVICE MARKETING ADDED TO DEALER EVALUATION FORMSERVICE MARKETING ADDED TO DEALER EVALUATION FORM


27 items for Service Marketing are evaluated


CUSTOMER F/UP

Follow-up calls

Corrective actions

Feedback

PROMOTION AND ADV.

Direct mail

Signboards

Outdoors

Campaigns

CUSTOMER CONVENIENCE

Free towing service

Adequate waiting room

Early bird service

Rental car

PROACTIVE USE OF CSI SURVEY AS A MARKETING TOOLPROACTIVE USE OF CSI SURVEY AS A MARKETING TOOL



KIA ASSOCIATED WITH ESPM – SUPERIOR SCHOOL OF MARKETING (2004) & FAAP – FUNDAÇÃO ARMANDO ÁLVARES PENTEADO (2005), FAMOUS UNIVERSITIES FOR BUSINESS ADMNISTRATIONKIA CSI SURVEY IS CONDUCTED BY THESE PARTNERS UNDER KIA SUPERVISION

THIS ASSOCIATION BRINGS TO BOTH KIA AND UNIVERSITY A VERY POSITIVE BRAND FEEDBACK

2004

Contacted customers

Surveys collected

PHONE CALL INTRODUCTION SPEACH IS: “KIA MOTORS DO BRASIL IN ASSOCIATION WITH OUR UNIVERSITY WANTS TO HEAR CUSTOMER VOICE”

University

1050

180

ESPM

1200

300

FAAP

2005

SERVICE CLINIC SHOWS ACTIVE FACE OF KIASERVICE CLINIC SHOWS ACTIVE FACE OF KIA



Participating dealers

Dealers understood importance of Service Clinics as a opportunity of keep and gain customers

Main automotive media has released notes reporting Service Clinics

Service Clinics has been an excellent way to tell customers that Kia cares

Customers during Clinic

4

65

4

71

2020

413413

2003 2004 20052005

SERVICE CLINIC SHOWS ACTIVE FACE OF KIASERVICE CLINIC SHOWS ACTIVE FACE OF KIA



Our main appeal to attract customer is a “Free Check-List”

All customers who visit Kia dealers will be granted with a comprehensive inspection of 53 important items of vehicle maintenance

Along with check-list form result, Kia dealer deliver full explanation of importance of correct maintenance and its consequences

In addition all dealers offers free car wash, gifts and special promotional prices for services and parts

SOME ADS OF 2006 SERVICE CLINIC IN BRASILSOME ADS OF 2006 SERVICE CLINIC IN BRASIL



SOME NEWS RELEASE OF 2006 SERVICE CLINIC IN BRASILSOME NEWS RELEASE OF 2006 SERVICE CLINIC IN BRASIL



NEW EMAIL ADDRESSES CREATEDNEW EMAIL ADDRESSES CREATED


Concentrated information by reduced number of external emails


BEFORE

9 individual emails

4 department emails

+

13ways of entry

AFTER

1 training email+

1 quality email

1 manager email

1 secretary email

+

+

5ways of entry

1 call center email+

Quality reports

Training application

Customer complaints

KMC communication

Dealers communication

NEW QUALITY SYSTEMNEW QUALITY SYSTEM


Quality report standards established and new form developed


BEFORE AFTER

Only one way of entry is considered – email: [email protected] Kia is formally commited to answer any Quality Report within 48 hours This discipline estimulate dealers to report quality issues on time

22 reports/month

50 reports/month

FIELD ENGINEERS VISITING SCHEDULED INTENSIFIEDFIELD ENGINEERS VISITING SCHEDULED INTENSIFIED


Field Engineers are links between Kia and dealers


BEFORE AFTER

To make their presence at dealer more constant is priority

Particulary for those dealers carrying on recovery improvement plans, Engineers presence is very important

1~2visits/dealer/year

4~5 visits/dealer/year

SERVICE MANUALS IN CD-ROM MADE COMMUNICATION AGILESERVICE MANUALS IN CD-ROM MADE COMMUNICATION AGILE


All Services Manuals are supplied in CD-Rom format with no cost


BEFORE

CD-Roms are produced and supplied to dealers immediately as manuals are available Additionally our costs with manuals reduced to 10%

AFTER

6 months

30 30 daysdays

receipt of master file/translation/editoring

/revision/printing/

deliveryreceipt of master file/preparation/recodin

g/delivery

SERVICE DEPARTMENT CD-ROMSERVICE DEPARTMENT CD-ROM


All Service information are condensated into a CD


This CD is freely available to all dealers at anytime and it is updated periodically With this CD, Dealer Service Manager can check any information regarding Service

BEFORE

ManualsBulletins

Kia WebsiteBookletsTraining Material Data sheetData sheet

AFTER

420MB

4) RESULTS AND IMPROVEMENTS 4) RESULTS AND IMPROVEMENTS ACHIEVEDACHIEVED

CSI EVOLUTIONCSI EVOLUTION

4) 4) RESULTS AND IMPROVEMENT RESULTS AND IMPROVEMENT ACHIEVEDACHIEVED

OUR CSI OUR CSI INCREASED INCREASED 18 POINTS18 POINTS

63 7961

80%70%66%

55%

64%57%

2001 2002 2004 2005 2006

CSI FRFT Loyal Customer

CSI reached 79 points. Also, FRFT & Loyal customer rate are 80% and 64% respectively. CSI and rate of FRFT and Loyal customer show improvement in comparison to the previous year

FRFT RATE TRENDFRFT RATE TREND


[Unit : %]

66 70 80

78

68 72 76 7868

7277 79 81

2001 2002 2004 2005 2006

Country Region Global

■ Trends from 2001 to 2006

OUR FRFT OUR FRFT INCREASED INCREASED 10 POINTS10 POINTS

RESUMERESUME


A plural discussion is first step to understand how your business is going.

Benchmark your competitors, all the time.

Benchmark your partners. (In case of Kia, we have very good examples to follow)

Listen to your dealers, listen to your customer, every day .

Sometimes you can´t wait for feedback – act based on your experience .

THANK YOU !THANK YOU !

MUITO OBRIGADO !MUITO OBRIGADO !

Brasil Presentation 2006

Documents

csi improvement

understanding

low csi score

incorrect

improvement

kia customers

dealers investment

kia decreased