Kia Canada is facing intense media and public scrutiny after a CBC news story published this week revealed details of the company’s alleged plans to withhold sold vehicles from customers in an apparent bid to suppress their sales numbers to avoid repercussions from their parent company in Korea.
It’s an odd story because car manufacturers around this time of year often do everything they can to boost sales numbers.
Kia Canada had already surpassed its previous record for sales in a single year. At the end of November, Kia Canada issued a media release indicating that without yet accounting for December sales, 79,199 units were already sold in 2023, putting it ahead of the previous record of 79,198 units sold for the 2021 calendar year. So you’d think it would be a good news story for the franchise.
But their dealers, in particular ones in Ontario, are unhappy because, according to a CBC report published on Tuesday, they have been told vehicles that have already been sold won’t be made available until sometime during the first quarter of 2024 — even though there are units available at a central vehicle storage compound in Wolverton, Ontario.
Prior to the CBC story being released, Canadian auto dealer was also pursuing this story and had reached out to Kia Canada for comment. Kia Canada spokesperson Susan Bernardo told Canadian auto dealer, “Though we cannot provide comments on internal business matters, Kia Canada continues to work with its dealers to ensure timely delivery of customer orders.”
The CBC story included a video they had obtained, in which Kia Canada’s Central Region Manager Vince Capicotto explained the inventory situation to more than 100 dealership reps during a November 17 video call. He explained the reasons the cars were being held back was because it could show over-achievement, which in turn could result in Kia Canada getting less future resources from its parent company in Korea.
Kia dealers and employees contacted by Canadian auto dealer are upset, because all sales are conditional upon delivery to the customers. However, they declined to speak on record because of the sensitivity of the matter and how it could impact them.
One dealer described the situation as “kind of weird.”
A manager of one store, who asked that his name not be used, said he was contacted after the CBC report by four customers canceling their orders.
“The dealers are going to be the ones who feel the effect of this for a very long time by this actually coming out,” said the manager. “It sucks that dealers are going to feel that.”
Canadian auto dealer obtained a document by Capicotto, in which he asked the Central Region Dealers for their December wish list of cars.
Following the letter by Capicotto, Central Region Dealers issued a response explaining their frustration with Kia Canada for not being provided with inventory that had already been sold while knowing there were available cars sitting in a compound in Wolverton near Cambridge.
In the letter to Kia Canada, a copy of which Canadian auto dealer obtained, the Central Region Dealers said 2023 has been “a fruitful year for both the dealer body and KCA,” but it has also come with challenges in relation to vehicle inventory.”
“Unfortunately the recent news of our cars being held (back) has not been received well by our dealer body. Central Region Dealers have been given another hurdle which we are finding very difficult to overcome. Dealers have been in communication with our clients since the date of the sale and have been giving estimated arrival dates in full transparency. We are now left to explain why their vehicles won’t be arriving, knowing that the vehicles are sitting a short distance away in a holding compound. We find it not only difficult to explain the reasoning, but unethical to not be candid about what’s really happening.”
“We are also trying to explain to our sales staff who are compensated on performance-based pay plans why their vehicles are being held back from delivery. Christmas is around the corner and our staff are expecting to earn a living.”
“We understand the strategic planning behind the short shipments in Q1 2024 and 2024 budgets, however we also have a responsibility to provide our clients with the cars that we promised they would receive when they signed a contract to buy it. In Ontario, either party (both the purchaser and seller) may cancel a sale agreement after 90 days if the seller cannot provide a vehicle within that time frame. The financial impact on Central dealers (and other regions) will be substantial, given the fact that other manufacturers have product on the ground.”
The Central Region Dealers subsequently issued a followup letter to Kia Canada, obtained by Canadian auto dealer, with six requests if the manufacturer planned to “take a hard stance” on stopping shipments for 2023. Those requests include immediately releasing all vehicles marked “sold” from the compounds so they can be delivered to customers, an adjustment to compensation for salespeople for November/December, and some other requests to help offset the financial impact to dealers.
“We appreciate the fact that KCA has always been willing to work with the dealer body towards a fair and equitable resolution on previous matters,” the dealers said in the letter. “We hope we are able to work towards a fair resolution on this urgent matter as well.”
