By Alysha Webb, Editor and Publisher
The industry is awash with talk of non-traditional investors coming into the dealership buy sell world, but traditional buyers are still driving most of the deals. That’s certainly what Kia Motors America, Inc. is seeing, said John A. Crowe, vice president of service and aftersale operations. Crowe is on the board that reviews potential Kia dealership buyers.
“Dealers buying dealers is driving buy sell,” he said.
Crowe spoke with Automotive Buy Sell Report on the sidelines of the J.D. Power/NADA 2014 Western Automotive Conference in Los Angeles on Nov 18.
Kia is seeing a lot of buy sell activity in its dealership body, said Crowe. Kia has 775 dealerships nationwide and that number has remained stable for the past three years, he said.
But, those dealerships are changing hands. The buy sell activity is more or less nationwide though the northeast is seeing less activity than other parts of the country, said Crowe.
Improved brand image means stiffer criteria
The Kia brand, part of Korea’s Hyundai Group, entered the U.S. market two decades ago. The brand was not well-known and Korean brands were not as well-thought of as they are today.
At that time it was easy to acquire a Kia point, said Crowe. “If you could get credit line you could get a dealership,” he said.
That has changed. Kia is now considered a quality brand. In the 2014 J.D. Power Initial Quality Survey, the Kia Cadenza topped the Large Car segment and the Kia Sportage topped the Small SUV segment.
In 2013, Kia sold 535,179 vehicles in the United States. Though down 4 percent compared to 2012, it was the second-best annual sales figure for Kia Motors America.
For the first ten months of 2014, Kia Motors America’s sales rose 7.4 percent to 489,711 units.
Kia’s criteria for ownership of a dealership has become much stiffer, as has the competition for Kia stores.
“Today we are attracting megadealer operators and publics,” said Crowe. More generally, Kia is seeing more high-worth individuals and organizations, he said.
Those are desirable buyers because they are well-capitalized, tend to have centralized back office operations, and offer more opportunities for employees, he said.
Kia prefers buyers who have good infrastructure and processes, said Crowe. It also places a lot of emphasis on the human resources side of the business. A preferred buyer has a supportive approach to employee retention and “leading edge methods of retailing,” said Crowe. That means they can find and retain the best managers.
“They have really honed in on the type of person they want,” he said.