It’s been four years since the start of the pandemic and the world of car buying is still being disrupted by the effects of the virus on global trade. Inventory is still rebuilding, people are still waiting months for new cars, and while things are healing, at least one manufacturer doesn’t seem to be helping. Imagine if your new vehicle was in the country, but wouldn’t get to you until the next calendar year. Sounds preposterous, right? Well, CBC News reports that Kia Canada has been deliberately holding new vehicles in shipping compounds in order to maintain its marketing budget for 2024. Um, what?
Yes, CBC News reports that a massive number of new Kias are currently stashed in a holding yard near Wolverton, Ontario, which is about as rural as you’d expect. That’s reportedly not the only holding yard keeping new Kias, many of which won’t hit dealership lots until next year. The concept of padding or sandbagging to keep corporate overlords happy isn’t a new one, but at a time when vehicle inventory is still recovering from an unprecedented shock, preventing vehicles from making it into the hands of consumers leaves a bad taste.
In a video obtained by the CBC, Kia Canada’s central region manager Vince Capicotto details a plan to artificially slow down sales at the end of the year, and Capicotto claims the purpose of maintaining a budget, specifically one for marketing.
There’s a high risk with over performance that Kia headquarters will not provide Kia Canada resources necessary in our budget for 2024 to have a successful year if we over perform for the balance of 2023 at too high a rate.
Well, this just looks bad for everyone involved. Consumers will be livid that their cars are being withheld, Kia Canada will likely be in trouble with the home office if this wasn’t pre-approved, and the whole operation looks deeply dysfunctional in this situation. You’re supposed to reward high performers, not punish them by limiting access to resources.
From 2016 to 2019, Kia Canada consistently saw between 71,669 and 76,612 annual sales. Then a little thing called a global pandemic happened, slowing down production, eventually resulting in Kia Canada delivering 68,258 vehicles in 2022. That shortfall has to be made up for somehow, and the most sensible way of doing that is to just build and sell more cars. It’s entirely reasonable to expect a substantial spike in sales once production recovers.
Of course, the public unmasking of such a move will make people who’ve been waiting on a Kia for more than a year absolutely furious, because wait times measured in calendar cycles should only be reserved for seven-figure hypercars handcrafted out of pure unobtanium. For any other new car, mass production is a thing, and it’s something automakers have historically done well. Plus, some people just can’t keep their old junkers limping along indefinitely.
Oh, and then there are the people selling Kias. At most dealerships, salespeople work on a commission model, and artificially limiting the number of cars to sell right before the holiday season might affect a few Christmases. Look, I know it’s hard to feel bad for people peddling Kias given the reputation Kia’s dealer network has built, but it would suck if you were a kid and the foot of the tree was empty because your mum or dad didn’t have any Fortes to sell.
Now that it’s been unmasked, this plan to artificially restrict the flow of new cars doesn’t seem to be working out for anyone. We’ve reached out to Kia Canada for a statement and will keep you updated as new information arises. Until then, hold onto your butts. This weird tale isn’t over yet.
(Photo credits: Kia)
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This happens a lot more often than you think. Many big corporations set forecast targets that should be met and not deviated too much from. Exceeding targets by a significant amount has downstream implications for future planning.
It’s a sad state of affairs but that’s unfortunately how it is.
FWIW, Wolverton is only about 30 mins away from me and I’ve never heard of it.
Side note: There are some Genesis cars on those lots too.
Close to the 401 but not really close to any larger towns. It is a decent place to stash something you don’t want others to notice.
There is almost no good thing to be said about the dealership system anymore. As far as I can tell, it’s just an artificial restraint of trade. This story just confirms my already negative prejudice against them.
(..feels how sharp the pitchfork’s tines are..)
Perhaps its the correct moment to go after them.
This has nothing to do with the dealership system and everything to do with how corporations are structured, managed, and financed. Companies play these kinds of games all the time.
And how is Hyundai choosing to keep its own product off the market a restraint of trade?
I’m not defending the dealership model, I just don’t see how its relevant to this story.
This all makes sense. Just like that Chuck E Cheese in DC that appears to have all those video games that are actually data terminals. Kids go there for “birthday parties” every weekend and “play” on the terminals, but they are really currency trading and controlling the world banking system and all of the developed economies…
Think about it folks! Children = Inflation! Duh!
How long should I hold onto my butt for? My kids are starting to appear worried
Until your new Kanadian Kia arrives – you might be holding on for awhile
Canada isn’t satisfied having only a maple syrup equivalent of OPEC and now they are trying to do it with Kia’s.
Hey, we had weed locked up for a while, now we need to pivot.
The key comment in the video is “Kia Canada wants to control whotesale and retail performance in 2023”. Wholesale is the kicker in my view – they are trying to game supply/demand for both used and new cars by limiting inventory.
Think of it. They are limiting product so customers have no choice but to pay list price for a car – which makes Kia Canada look like they are amazing to HQ.
But limiting new product also has the knock down of improving resale prices of used Kia’s coming off lease they need to get rid of. Customers that were looking at wanting to buy new but can’t wait will look at cars coming off of lease.
So win win. High new car margins. High off lease car margins as well.
That is a very, very dangerous game to play. You can only control that for so long before the market can absolutely tank both on new and used car prices. The second new car supply opens up and there is no waiting time for new cars, the prices of cars coming off of lease will tank. If you get too much new supply, heaven forbid, the dealers might actually have to sell for less than asking.
I hope they get utterly burned with this market manipulation.
This is not just Kia that screws with this crap… there is a large European mfg holding onto to several thousand recently off lease (think two three year leases) top of line very expensive fist gen EV’s. They are absolutely terrified the wholesale market will tank values when those cars are put to wholesale…. and have a knockdown affect on new sales as purchasers will see astronomical depreciation that the brand is not usually known for. They are refusing to put those off lease cars to wholesale and are just sitting on them.
May they all get absolutely burned with attempting to manipulate the market.
Wait, WHICH European mfg is NOT known for astronomical depreciation? I am having a hard time thinking of one.
Ferrari?
Porsche.
Kinda think Toyota does this too, interesting cars get sent to high-markup dealers before MSRP dealers, they continue to trade above MSRP used, and then Toyota corporate brags to consumers about how high the resale values are.
US Kia dealers: “wait, that was an option?”
This Capicotto guy definitively graduated in a soviet business school
Dude, this is a feature not a bug of Capitalism.
No, in that case, there wouldn’t be any extra cars to hide
Technically Ladas are cars
But they wouldn’t have produced enough to have any that need concealing
You’ve never worked for a large corporation, have you?
Can’t they presell? With deposit do they get paid? Or not til after delivery. If sagging sales at EOY won’t that limit supply December 2024?
I always known that Canadian Kia dealers are scumbags. I assumed it was because when Kia came to Canada, they signed up a bunch of used car dealers to sell their cars. But now I see this comes from the top.
Agreed, they’ve always been sketchy, giving off that slimy used car dealership vibe with pushy salespeople and tacky advertising.
Dammit Capicotto, you said the quiet part loud
Yeah, something tells me he probably won’t be managing that region much longer…..
The sad thing is, he is probably making the best decision given the absolutely horrible system Kia HQ has set up. This guy gets paid to meet KPIs and meet goals, apparently not exceed them. Kia HQ apparently has shitty policies when people exceed target; so they are better off sand bagging at the end of the year. They made a stupid game, can’t be pissed at the guy for playing it.
Yeah, hitting quotas is not always about being good at your job. Look how many bonuses execs get for “hitting quotas” at the expense of long-term company health?
I was more-so thinking they’d be pissed at him for publicly saying it.