Kia aims to recover sales in China with pay cuts of executives

By Park Sae-jin Posted : July 31, 2017, 14:02 Updated : July 31, 2017, 14:02

[Courtesy of Kia]


In a desperate move to boost sales in Asia's largest market, South Korea's second largest carmaker, Kia Motors, has offered to cut down about 10 percent of salaries for senior officials and executives based in China. 

Industry sources said the cut was applied to those positioned higher than general manager level at Kia's branch in China and Dongfeng Yueda Kia, a joint venture with China's Dongfeng Motor Corp and Yueda Group.  Kia plans to use the money saved from its payroll cut for sales promotion by dealers.

The cut was part of a "new card" proposed by Dongfeng Yueda Kia vice president So Nam-young to promote relations with about 100 Chinese dealers.

Early this year, the dealers demanded some 400 billion won (356 million US dollars) in compensation for lost sales, citing increased inventory pressure. To boost their morale, the dealers would be given bonuses.

Since he was appointed as a "relief pitcher", So has sought to reshape a network of dealers in China.  Kia also plans to strengthen contact with consumers through outdoor marketing activities. Kia faces a tough challenge from Chinese carmakers who have increased sales with low prices by taking advantage of consumer sentiment aggravated by a dispute over a US missile shield.

Kia will launch three new strategic models including "K2 Cross", "Pegas" and "Forte", which were unveiled at the Shanghai Motor Show earlier this year. Kia aims to sell about 100,000 units of Pegas, a small-sized sedan, and 20,000 units of K2 Cross, a sport utility vehicle, annually. Both models target the Chinese car market.

In the first half of this year, Kia sold 128,970 vehicles in China, down 54 percent from a year earlier and smaller than this year's year-end target. Now, Kia thinks it is slowly recovering sales and predicts better sales in the second half.

 
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