By on October 10, 2017

2017 Kia Cadenza - Image: Kia

For over a decade now, Kia has slowly but surely been moving toward doing the impossible —transitioning the brand image from “subprime, budget, shady, and non-desirable” to “a slightly Buick-ized version of Hyundai.” In order to do this, Kia dealers have always relied on the one factor in their favor, which is the ability to sell on price. While the MSRPs on Kias aren’t too far off the competition, the stores have historically dumped new inventory at prices well below the sticker. Looking at an Altima? Why not try this Optima at $3,000 off instead?

Of course, when you operate this way, it makes it difficult for salespeople and managers to make any money, since there’s little to no profit in the deal. For over a decade, Kia has offered sales staff what’s known in the business as a “spin” every time they sell a new car — they can call into a number or log on to a website and enter a VIN-specific code for a “spin” and a chance to win a bonus that ranges from $25-500 per car. If you sell Kias for a living, this is likely how you’ve been paying your bills for as long as you can remember.

According to sources within Kia dealerships, a little over a month ago, without warning, Kia stopped its OEM incentive program for management. Then, for October, again without warning, Kia stopped the spin program for sales people, also with no explanation. Rumor has it this decision comes from the new VP of Sales for Kia Motors America, Bill Peffer, who came to Kia from a dealership group in the Pacific Northwest. Dealers tell me that they’ve repeatedly e-mailed their corporate contacts for explanation, but none is expected.

Other than a sharp increase in the mortgage foreclosure rate for Kia dealer employees, what does this mean for Kia in the States?

screen-shot-2017-10-10-at-10-00-56-am

Likely, it means that Kia intends to encourage dealers to start selling Kias at actual MSRP, or as close to it as possible. With a lineup of recently revamped cars, including the Rio, Sorento, and others, Kia is looking to compete head-to-head on actual merit, quality, and features. One Kia dealer told me their cars “are as good as anybody’s” and that they no longer have to be the cheapest.

This is, of course, a terrible strategy.

The only Kia showing any year-over-year sales growth so far in 2017 is the Forte, and it’s marginal. You might say, “Bark, the entire industry is down.” True, but Kia is outpacing the overall industry decline, thanks to a whopping 50-percent decline in Rio sales and double-digit losses in both the Sportage and Sorento, Kia’s contenders in the highly-competitive volume CUV segments.

And, of course, Kia dealers are still gonna Kia. The advertisement at the top at this page is running as we speak, even after the removal of the “spins.” They’re still gonna hit customers with every trick in the book — foursquares, throwing people in the box, losing the keys to the trade — and they’re still going to generally advertise like they’re an automotive flea market.

Yet another issue is the fact that Kia doesn’t have a particularly strong captive finance company, so dealers often are working with credit unions and subprime financers, who base their LTV (loan to value) on actual transaction prices. It’s going to be difficult for Kia dealers to get 520 credit scores bought with zero down at sticker price, as most banks are only willing to go 110 percent of value at most for subprime customers, and every bank knows that Kias aren’t actually worth the MSRP on the market.

So what does this all mean for you as a customer? It’s all bad.

Not only are you going to continue to get hammered with every devious trick by the sales and finance departments, they’re also going to try to hold margin on the front end. And the removal of the spin means higher salesforce turnover, which means a less knowledgeable salesperson trying to tell you about the crumple zones on the Sorento.

One Kia dealer told me that he’s personally excited about the change because his dealership offers competitive pay. “Lots of Kia stores have terrible pay plans, but they make up for it with the spins. Now that the spins are gone, those guys are gonna be looking for work. I’m going to steal a bunch of them.”

But make no mistake — Kia dealers are pissed, and they’re deeply concerned about how it’s going to impact their stores.

[Image: Kia Motors]

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57 Comments on “Bark’s Bites: Kia’s New ‘Spin’ on Compensation Might Mean a Change in Direction...”


  • avatar
    chiefmonkey

    If all that mattered to me was a car’s paint, I would have happily bought a smokey blue Cadenza! What a beautiful blue.

  • avatar
    kvndoom

    I didn’t even know WTF the new Sportage was when I was last at the Kia dealer. Gross! Easy to see why its sales are down. ugly costs you money.

  • avatar
    notapreppie

    Nothing destroys morale faster than changing compensation without telling everybody first.

    Except maybe doing that and then refusing to answer questions about it.

    • 0 avatar
      JimZ

      Don’t worry, they’re all going to get a 1 year membership to the Jelly of the Month Club.

    • 0 avatar
      mmorales

      Exactly. And to triple down on morale, don’t have a public plan for how sales folks should make up the money. One thing if they stopped the spins but said ‘this is how you can make up the money and we’re going to help by doing X, Y, and Z’, people would grumble and bitch. But just cutting a major source of revenue without telling anyone how they’re expected to go forward? Ouch.

      And of course fear, uncertainty, and doubt causes the best sales folks to leave first. If I was selling KIAs, I’d certainly be noting that Honda seems to be selling a lot of cars lately…

    • 0 avatar
      Ol Shel

      I’m most worried about the dealership owners. I hope they’re able to eat!

      The industry is sleazy because the owners are. Rarely do dealerships fail, and many towns have dealership dynasties that are too big to fail, and like fish, they all stink from the head.

      • 0 avatar
        Detroit-Iron

        Dealers are, for the most part, skels. That being said I think a lot of salespeople are just trying to get by. If you have read Jack or his buddies or even old Steve Lang it doesn’t sound like a lot of malice, the people on the front line just get squeezed from both sides. On the other hand, fvck ’em. I have never stolen a penny from single mom so I don’t have much sympathy for salespeople. I overheard a dealer trying to get a guy who made $30k a year into a $30k truck (back when that was a lot of money) and trying to get a woman into a 72 month lease on a fvcking GEO, back when Geo was a brand.

  • avatar
    SCE to AUX

    Maybe there’s a different compensation plan in place?

    The Kia dealer I’ve bought two cars from (new Kia, used Hyundai) is pretty straight-up, and I never felt a lot of pressure during the buying process or during financing.

    But Kia does throw a lot of money at certain cars sometimes. My 13 Optima Hybrid had $5k on the hood when I got it in May 2014. MSRP was $26k; I got out for $20k. The dealer told me they sold 6 of them that day alone. There is no way I’d have paid closer to MSRP for the vehicle.

    • 0 avatar

      A friend of my fathers was a lifetime car salesman (Ford mostly) For a while he worked at a kia store. My dad asked how that was (this was about 7 years ago) he said pretty good at first then lousy. I guess the sales dept made most of it’s money on third party finance. (adding points) and they used to give a percentage of F and I to the sales guy. He said you could sell a Optima for nothing but make it up on F and I thanks to the average customer credit score. He said but a new manager came and went to a new system splitting the system so he went back to a Ford dealer.

  • avatar
    Felix Hoenikker

    The local Dodge Kia dealer has the dubious honor of being the slimiest dealer in the area for the last 20 plus years. I won’t even slow down when I pass it let alone wander in there.

    • 0 avatar
      brn

      I used to work for a company that owned dozens of dealerships. Two of those dealerships were Kia. Not slimy, but not great. Definitely our bottom end stores, but we still had some scruples.

      We sold the franchise to another dealer group. Now truly slimy. Not only turned me off Kia in these parts, but turned me off the entire dealership group.

  • avatar
    Damasconian

    41 here, lifelong car guy. I’ve owned various brands, from Honda to BMW and what Kia is doing these days has me intrigued. Would I buy a Stinger? Probably not, but its the first Kia I’m excited to see/drive and would give it some thought. My question is if Kia goes “upmarket” who fills the bottom market gap that remains?

  • avatar
    ldl20

    “Spins?” I wonder who thought of this terminology? Back when I used to sell bicycles from 2000-2005, the owner would give me a “Spiff” for every undesirable bike that I sold (ugly colors, odd frame-sizes, older components, etc.).

    • 0 avatar
      dwford

      In the old olden days, when you sold a car you literally spun a wheel to see what your bonus for it was. Nowadays it is usually a variable number based on the particular car you sold – it’s days on the lot, trim level, etc.

  • avatar
    bluegoose

    This reminds me of FCA removing the incentives on the 200 and Dart. They said they wanted the cars to “Stand On Their Own Merit.” They fell on their face and now they don’t exist anymore.

    The problem is people buying budget cars often use the rebate as a down payment. No rebate, no sale. It is what it is.

    • 0 avatar
      matt3319

      I bought my 2015 200S AWD mai ly because it was a good car but also because it had tons of cash on the hood. It made that $33K car into $25K.

      I would even consider a dodge/Chrysler product without huge incentive because of the miserable trade value.

      Marchionne was dumb to stop the money and then criticize the 200. Sales plummeted. You can still find new 2015/2016 models. And plenty of them.

  • avatar
    slavuta

    Kia makes no Optima SX or Stinger with MT. so I d-o-n-t c-a-r-e

  • avatar
    FreedMike

    So…if you sell Kias, a great deal of your compensation is “spin the wheel”?

    Wow, no wonder every Kia dealer I’ve been to has been, shall we say, declasse…who the hell would want to make a living like that?

    • 0 avatar
      romanjetfighter

      hmm psychology shows variable reward is addictive. same psychology behind chests in clash royale or world of warcraft or pokemon. also social media. u never know how many likes ur next post will get

  • avatar
    pwrwrench

    Had some interest in the Niro. Went by a nearby Kia dealer and found all the cars had the extra window sticker adding on $5K. Things like “paint protection” (Tru-coat!), and door edge guards(looked like a strip of clear plastic tape on the edge of the door).
    “hammered with every devious trick” is correct.
    My S O innocently asked the salesman about the extra $5,000, or was it $4,999?
    His answer was so B S I had to walk away.
    He did mention the crush zones and how the engine would go under the floor in a collision. Not sure if that’s a good sales tactic.

  • avatar
    Jerome10

    I’m no HR/compensation guru, but these spins sound like a god awful compensation plan.

    You sell a car, would you not expect a payment of XYZ based on the sale, or the value of the car sold, with some sort of incentive for hitting certain targets?

    The idea that I could sell an Optima in the morning, spin the wheel and make $25…then later in the day sell an exact same Optima and make $500 would infuriate me. It’s a stupid system, based on chance and not quantity or value of goods sold, and likely has stupid outcomes.

    Who would want compensation based on chance??!!

    and “the cars are as good as anybody’s”….yeah OK great. Ask Cadillac how that is going. Or other industries. Just because you’re “just as good”, which may be 100% true, brand still matters. Nobody gonna pay good brand prices for a lesser brand, even if the product is “just as good”. And I’m sorry, but KIA has probably the junkiest brand image in the USA for autos. Who else? Fiat? You’re not gonna get Toyota prices with that.

    • 0 avatar
      don1967

      This former car salesman agrees with you 100%. You want sleazy salespeople, pay them in lottery tickets. You want professionals, pay them professional salary and/or commission.

  • avatar
    dwford

    Wow, that would be it for me if I worked there. I made over $20k just in spins one year selling Hyundais.

    This is how the car sales industry treats the front line salespeople – like crap. The dealers do it to – changing compensation with no notice. THAT’S why most car salespeople are terrible – they are treated terrible.

    • 0 avatar
      FreedMike

      Yep.

      I’ve been thinking about a career change recently, and for a brief moment considered doing something like selling high-end cars at the right dealership.

      Then I thought better of it.

      • 0 avatar
        dwford

        You can make good money selling cars, but you will suffer to do it – long hours, everything is your fault, and you take crap from customers, managers, back office staff, the service department, etc.

        It’s more of a job for a recently released felon with a slight drug problem that would have trouble working elsewhere. They are usually the best salesmen.

        • 0 avatar
          28-Cars-Later

          The business is lots of fun but a constant hustle.

          Hustle, hustlin’ hustlin’

          I concluded I’d rather sit on a computer, which also has its pluses and minuses.

  • avatar
    sportyaccordy

    At the end of the day the market is going to pay what it’s going to pay. Kia higher ups are in for a rude wake up call if they think anyone is going to pay full price for their rides. They sell widgets. For many Kia buyers it’s not much different than buying something off Amazon, except credit is a factor. With weak credit offerings and no discounts they are DOA.

    • 0 avatar
      JohnTaurus

      Agreed 100%.

    • 0 avatar
      FreedMike

      That’s a shame, because Kias (and Hyundais) are either fully competitive product-wise, or very close to it.

      Their pricing reminds me of Kohl’s, or Penney’s – you pick up a pair of Dockers with a $65 tag that are “on sale” for $24.99. Anyone with three functioning brain cells knows he’s not getting $40 off and that the real (and fair) price here is $25, or maybe a couple of bucks less.

      Similarly, anyone whose IQ is above room temperature knows that a $20,000 Forte that supposedly has a $4,000 discount was meant to sell for $16,000 from the beginning. If $16,000 if what they planned to sell the thing for to begin with, why not just do that?

      It just opens the door for old-time, four-square, Tru-kote nonsense that no one with money or a decent credit score wants to hassle with.

      If they want to improve their marketing, they need to improve how sales at their dealerships are handled. Maybe this is a good first step.

      • 0 avatar
        mmreeses

        -It just opens the door for old-time, four-square, Tru-kote nonsense. –
        The Dilbert cartoonist calls this a “confuse-opoly”

        Nearly every industry does it in some manner. Because it works and prevents people from cross-shopping because many can’t walk away from the 2 hours of sunk costs at the dealer.

      • 0 avatar
        Scoutdude

        And look what happened to JCP when they ended their continous sales for every day low pricing. Their business went to hell. The consumer would rather buy those jeans 2 weeks out of the month for $24.99 than have them available all day every day for $25. Fact is out of 100 pairs they probably sold one or two and full price and the rest at that $24.99 price and some at $34.99 the first of many weeks they were “on sale”.

        • 0 avatar
          FreedMike

          …and it’s still in hell, Scoutdude. Ditto for the other department stores who are still doing this stupid s**t.

          Meanwhile, look who’s doing well in retail these days…Nordstrom and Apple. Neither relies on fake sales to make money.

          And neither Hyundai nor Kia are doing well sales wise either.

          Make what you will of that.

          • 0 avatar
            Scoutdude

            No JCP did improve when they brought back the high price tags and constant sales, though they are not doing well.

        • 0 avatar

          Ironically, JCP’s everyday low price strategy was implemented by a former Apple exec. He didn’t last long.

          • 0 avatar
            FreedMike

            Check JCP’s stock price, scoutdude. They aren’t doing even remotely well…probably because their customers demand they give away their product with stupid coupon schemes and whatnot.
            Their margins are beyond small.

            (My youngest daughter works there part time…it’s a total s**t show.)

            My dad spent 20 years in the restaurant biz. One of his locations was in a neighborhood full of old folks. Sales were down. I suggested coupons. He told me that once you start down the coupon path, you’re f*cked – the people who use them will ONLY buy when you’re giving stuff away. He was right. JCP’s proof.

          • 0 avatar
            JimZ

            other than doctors, nobody has ever made good business catering to old people.

    • 0 avatar
      dwford

      And they are in for a rude awaking if they thing the sales staff will prioritize selling their cars for no spins if there is another brand in the showroom with spins. Get ready for a sharp drop in Kia sales.

    • 0 avatar
      Big Al from Oz

      sportyaccordy,
      So what about Lexus, Acura or even Infiniti?

      You know Subaru, Toyota and even Honda started out as cheap and cheerful products.

      Hyundai and Kia I think are very much proving themselves as top class competitors. Overall the view held by many now is far above that of 20 years ago. Many even consider Hyundai/Kia vehicles on par with Toyota.

      I do believe Kia will offer very competitively priced vehicles well into the future. I even believe that FCA or parts of will eventually be owned by the Hyundai/Kia group.

  • avatar
    SCE to AUX

    In 4 sales experiences at 3 Kia dealers, only 1 was slimy (I was accompanying a friend who bought a Soul). The others were great.

    As a 2-time Kia buyer, I can’t identify with the stereotypes TTAC B&B always apply to Kia products and their customers. My credit is good, and the cars have been fine.

  • avatar
    87 Morgan

    Not good. Even if the idea is to move the ATP closer to MSRP VS Invoice on a Kia the sales person has zero chance of making a living.

    Example: MSRP: 25000 Invoice: 24250 which is very close to accurate on a Kia. Usually the sales person makes a flat that stair steps with the number of units delivered (because they sold at invoice) + the factory $$ via spins. So, now they have to rely on holding gross? And hope for 25% of $750 **IF** they sell at full pop..they can make $187.5. Which will never happen, as no one pays MSRP for a Kia, ever.

    It really is a shame. A person could make a living selling cars back in the day, and despite what you read here, most were/are honest folks.

  • avatar
    Big Al from Oz

    Attempting to align Kia as a “Buickised version of Hyundai” is a huge error and overstatement. What is the author thinking?

    I mean, just the quality difference between Hyundai/Kia and your Chev/Buick products is like chalk and cheese. I suppose the author consider FCA products on par with Toyota or Lexus?

    Hyundai and Kia have not produce GM quality products for quite some time.

    Maybe the statement should of read “Kia is becoming the Audi’ised version of VW”. This is more apt.

    I would love to see a “Kia’ised pickup” to challenge the latest up and coming world leading pickups like the X Class, BMW’s future pickup, even the Ranger Raptor.

  • avatar
    Leon Stewart

    This article is very very early at best I work in the industry and know for a fact that if i today, probably get $500 on my card at the end of the month. Yes most vehicles have lost their spin but I believe that this is due to the deal that is on the Cadenza right now. Also I just got a letter in the mail yesterday about the card company change that doesn’t seem to support the incentives going away.

  • avatar
    autointelligence

    Bill Peffer came from a dealer group in the northeast not northwest. Balise Auto Group from Springfield Mass.


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