After a few years of examples springing up in places like Malaysia, South Korea, China and Mexico, Kia’s Global Space Identity, dubbed Red Cube, has hit the brand’s Canadian dealer network.
Punctuated by the typical assortment of dealership standards – large glass frontage, a bright and airy showroom, enclosed service drive-thru, new-car delivery area – and topped with striking red exterior panels, the program will be the first network-wide change for Kia dealers since the brand started selling in Canada back in 1999.
And while the factory is mandating all retailers eventually complete Red Cube, don’t call it a traditional image program just quite yet.
“We’re trying to migrate away from the connotations of the traditional factory program and saying instead that the focus is really on modernization and expansion,” explained Ted Lancaster, vice-president and COO of Kia Canada.
“We have a lot of dealers who have grown significantly in the past few years that may not have the most modern facilities. When you look at advancements in technology, having simple things like spots for customers to plug in their devices or Wi-Fi in the dealership for customers who are waiting for service are the kinds of benefits that are absolutely essential nowadays. That’s where our focus is.”
This image concept seemed to have first emerged in Asia around 2011. The program mirrors many others in automotive retail and includes a boxy front composed primarily of glass.
The exterior panels are a deep and rich shade of red that makes the dealership name in white letters positively pop against the backdrop.
On the inside it is more of the same dealers have seen for the last few years – an expansive showroom with desks and workstations pulled to the side to give the feeling of roominess and space on the floor.
Both the flooring and walls are bright white. There are also square-footage requirements tied to a store’s individual volume.
Despite it having all the hallmarks of another mandated facility image program, Lancaster insisted Red Cube is not a traditional program when compared to others in the market. Unlike Hyundai, which set a five-year window for its Canadian dealers to complete its current global program, Kia seems to be taking a less-aggressive approach here.
“We’re hoping that 50 per cent will be done by 2020. Then we’ll work on the other 50 per cent after that,” Lancaster said. “We are not going out and saying every single dealer has to do this. We are looking at dealers that have the highest propensity to increase sales and brand perception in their market and saying this is a great opportunity to expand.”
One such dealership is Eric Levitt and Katie Naughton’s 401 Dixie Kia in Mississauga, Ont. Levitt, who happens to also be the new chair of Kia’s dealer advisory board, is hoping to have everything in place to start work this summer on what will be Ontario’s first Red Cube store.
The first in Canada is Kia Trois-Rivières, which opened in January. Attempts to management at Kia Trois-Rivières were unsuccessful.
Levitt’s plan is to renovate the Honda store left vacant last summer when Mario Toyotoshi moved his Ideal Honda and Dixie Toyota franchises from the 401 Dixie Auto Mall to new locations in the 401 Pearson Auto Mall.
The change will mean an increase in square footage from 14,400 square feet to 17,700 square feet for Levitt’s operation. Lot size will grow from 1.75 acres to 2.5 acres.
He noted the move would also mean significant increases in service capacity and added exposure to nearby Dixie Rd.
“The timing was perfect for us as we were moving and were going to have to renovate regardless. The old Honda store still has some original elements from when it was built in the 1980s so we are looking forward to being able to make it our own,” he said.
Canadian Kia dealers were first officially told about the program in September 2015 at the national dealer meeting, though discussions of it coming to this market had swirled for years based on what was going on in Asia.
When Kia announced its entrance into Mexico with 21 brand new Red Cube dealerships in the summer of 2015, one Kia Canada dealer speaking on the condition of anonymity said it was obvious the program would head this way.
Lancaster said corporate has been working with the dealer advisory board to identify the biggest opportunities first and coordinate on all the standards and specific elements.
Sources said approximately 30 dealerships have been selected to complete the program first with a number of additional hand raisers having expressed interest in becoming compliant.
Levitt explained that, typical of any program like this, some dealers have expressed concern about the timing of the strategy.
“Just like every other manufacturer, there are dealers that are a little hesitant on change and don’t necessarily want to spend the money,” he said. “You also have lots of other dealers who think it is great for the brand and will help move us forward as a network.”
Compounding the issue for Kia has been a decline in sales in recent years after hitting a high of 77,900 units in 2012. Though new-car sales volume grew by 5.6 per cent last year to 71,670 from 67,887 in 2015, the company has added a number of dealerships in recent years meaning sales per store has been affected across the board.
In April 2011, there were 171 stores; as of March 2017, there were 189 points.
Kia management stressed to Canadian AutoWorld that dealer profitability on average for 2016 was up with Ontario and Quebec leading the way. Lancaster added that the plan was to continue that profitability trend this year with the support of the dealers and the advisory board.
Still, there is no denying the sentiments of some retailers, a mood reflected by the brand’s drop in the annual Canadian Automobile Dealers’ Association’s dealer satisfaction study. After climbing as high as 11th place in 2014, Kia fell nine spots to 20th in 2015. Though it appears it dropped further last year moving from 20 to 22, Lancaster pointed out that satisfaction technically improved in 2016 as the score moved from 70.40 to 71.10. The position drop was due instead to the additions of individual rankings for Cadillac and Lincoln.
“Satisfaction among dealers was significantly higher in a number of regions including out West, Atlantic Canada and in Quebec,” he said.
One dealer wishing to remain nameless told Canadian AutoWorld that every Kia dealer wants to see the brand improve and have the less-than-stellar stores updated, but it is difficult to ask the network to invest millions in facilities when profitability has been falling.
“There is never a great time for these image programs, but I was disappointed with the timing of this,” the dealer said.
Levitt noted that Kia has been flexible on timelines so far and hasn’t brought any unrealistic demands to the network. Plus, he said, having plans in place for 50 per cent of the network by 2020 is “very reasonable” given what some other automakers insist upon.
“This is not an image-for-image-sake program. If you are increasing capacity or modernizing facilities and processes, there is a return on your investment. This move makes a lot of sense,” he said.
Recent growth in the network is another factor as it is difficult to ask owners to spend millions updating a relatively new store.
Lancaster said Kia is trying to mitigate that problem by grandfathering Red Cube for dealers who have completed new facilities in the last couple of years.
He also stressed the company is maintaining open communication with the dealer body and that timelines for Red Cube are not like any other programs in the market.
“It is clear that the biggest ROI for any dealer comes from modernization and increases in capacity. We have sold more than 750,000 vehicles in Canada now and our service departments are getting busier and busier so throughput is essential,” Lancaster said.
“Collaboration with the dealer body is so important because dealers are essential to our business.”