Kia Motors SWOT and PESTLE Analysis

Strength

1. Strong Financial Performance and growth Strategy: Kia Motors has been a consistent performer in terms of revenue with reported revenue in 2016 being 52713 billion Won and growing to 53536 billion Won in Q4 2017. The reported growth over 2016, is 1.6 %.There was an increase in sales in overall vehicle segment over the year also. The sales grew by 8% in Europe. Kia Motors Corp's ROIC % is 1.99%.With the completion of their new plant in Mexico, boasting an annual production capacity of 400,000 units, they have increased their global production capacity of 3.55 million units. In 2016, the reported operating profits went up by 4.6%.Kia Motors primary strategy lies in entering to advanced markets, expanding Chinese market and exploring small to mid sized market. The Strategy lies in enhancing the business operations and product identity by focussing on production(SCM), quality, sales and operations

2. Diversified product portfolio: Kia Motors Company has multiple products under its belt. With new addition of sports vehicles to electric hybrid vehicles, the organisation has followed an aggressive growth strategy over past few years. Even the company has confirmed that it will be launching new vehicle segments in upcoming years to increase its market share to more than 30%. By launching more electric hybrid vehicles the company is targeting to strengthen its presence in the eco-friendly car market. Further, the company is planning to venture into Indian market by partnering with Hyundai

3. Strong global presence: Kia Motors has developed its global presence over the years. Kia Motors has been expanding its global footprint by using a strategy of comprehensive localization. Starting in 1944 at Korea, the company has diversified its presence across strong markets like Mexico, United States, Europe, China. The company has experienced a growth of 3.5% in US market, 13.1 % in Europe market and a 14.8% growth in China market. In 2016, Kia ranked 69 as a global brand with a brand value of 6.3 billion USD. After being bought by Hyundai, the global presence is expected to strengthen further. The brand slogan of Kia motors is “Power to Surprise”, which fairly suggests their growth strategy over the years. In 2016, Interbrand, a major brand consulting company, valued the Kia Motors brand at USD 6.3 billion, up 12% year on-year. Kia Motors ranked first among both premium and non-premium brands in J.D. Power & Associates,2016 Initial Quality Study in June, receiving recognition for its strong product competitiveness. Apart from this, in 2016 Kia Motors ranked fifth in annual auto reliability survey

4. Strong innovation and creativity platform: With a strong interest in electric mobility market, Kia Motors are looking forward to enter the green car technology market and are targeting to become the global leader in low emission car market by 2020.Kia is investing huge sums in developing in research and development activities to create a new line of decreased CO2 emissions with platforms like hybrid and plug-in hybrids to battery-electric and fuel cell electric vehicles. Kia has also announced its investment in creating partially autonomous vehicles by 2020 to creating fully autonomous vehicles by 2030. Investment by parent company Hyundai is recently for technologies like ADAS, Lane assists, navigating traffic jams and parking systems. On creativity and innovation side, Kia has developed its strength in design area. A key element of Kia’s designs is ‘The Simplicity of the Straight Line’, which they have embedded in their design management systems. Apart from design they have also applied the philosophy in customer communications, for example the app which provides an interior tour of the Optima vehicle by scanning the QR code

5. Product design and Warranty: Keeping in mind the current state of market Kia has focused its product strategy by concentrating in its design and thus has developed its models in different designs hence providing a good assortment for its customers. They have developed models in sports segment with high end technologies and placed the products at a relatively low price, thus it has boosted the sales. Similarly, the warranty period is for more than 5 years which has improved its preference in the minds of customers which has positioned the company in a better place than the competitors

Weakness

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Opportunity

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Threat

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Political

1. Trade regulations and policies: Changing global trade policies and tax regulations have a significant impact on the operations of Kia Motors. Kia Motors has its presence in four significant regions – China, US, Mexico, and Europe. Kia Motors operations are thus subject to change in the US trade policies. Trade protection measures such as import or export restrictions and requirements, the imposition of burdensome tariffs and quotas or revocation or material modification of trade agreements are some of the parameters which will affect the operations and cash flows for Kia Motors. Moreover, the trade protection measures are expected to further intensify due to presidential guidelines. Hence the cost of manufacturing and raw materials will be going up in the country, as a result will affect the price of the vehicles and thus sales will also be affected

2. Political and diplomatic tension with China: The diplomatic tension between China and Seoul regarding US missile system has had a major impact on the South Korean automobile industry. China says the system poses threat on their internal security. This has led to the decline in sales of South Korean firms due to the boycott by Chinese. Thus, there has been a cut down on shifts from these firms in Chinese factories. This has led to decline in sales as well as share for these automobile firms

3. Govt. Support for Electric Car Technologies: South Korean government has committed to spend KRW150 billion (USD125.9 million) in assisting the research and development (R&D) of alternative-powertrain vehicles during 2016–20. It aims to have about 820,000 HEVs, 200,000 EVs, 50,000 PHEVs, and 9,000 FCEVs on the country’s roads by 2020. It is also looking to have nearly 1,400 EV charging stations and 80 hydrogen fuel station by 2020. South Korean firms are trying to leverage this advantage and thus have boosted the confidence of these firms to invest in green car technologies. Kia motors strategy is inclined to this electric car and hybrid vehicle development.

Economic

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Social

1. Vested Consumer Interest on Vehicle Safety: Vehicle Safety is a primary requirement in current scenarios by customers. Apart from Ergonomics, performance, aesthetics, design quality and safety has been one of the major criteria of buying preference for vehicles. With recent developments in technology like alert systems and imaging systems the demand for safer cars are more. Kia motors after product recalls are on the backseat recently however with proper quality raw materials and embedded safety features will improve the image of brand in this field.

2. Focus on fuel efficient cars: Advanced fuel emission technologies and powertrain developments have bought automobile companies to opt for more fuel-efficient mechanisms in the vehicle. Upcoming fuel emission regulations like Euro 6 have also been one of the major concerns for the automobile companies to arrive at a balance between controlled emissions as well as fuel efficiency. Customers derive value for their investment in the vehicle purchase in form of design, performance and fuel efficiency. So, automobile firms are in constant endeavour to develop fuel efficient technologies in the car by improving braking as well as in power train which will provide them an edge over the competitors.

Technological

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Legal

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Environmental

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