SWOT And PESTEL Analysis of KIA Motors

KIA Motors, commonly known as Kia or KIA Corporation, is a South Korean automobile manufacturer founded in December 1944. Formerly known as KIA Motors Corporation and Kyungsung Precision Industry, this company is headquartered in Seoul, South Korea. This multinational enterprise holds the second-largest position of automobile manufacturer following Hyundai. So it's a no-brainer that the considerable market share and impressive sales have made KIA a well-known name in the automobile industry. In the year 2019 alone, it sold over 2.8 million vehicles boosting its revenue by 13.8% in the first quarter of 2021.

Founded by Kim Cheol-Ho back in December 1944, Kyungsung Precision Industry was the manufacturer of bicycle parts and steel tubing. In the year 1951, it became the first company to produce Korean domestic bicycles known as the Samchully. Changing its name to KIA Industries in 1952, the company was overwhelmed with several collaborations and was blessed with substantial growth. The bliss was, however, not everlasting as it was declared bankrupt in the year 1977.

It was during the Asian Financial Crisis when the Korean leader was facing its dark hours. However, the pain was short-lived as in the year 1998; it reached an agreement with Hyundai Motor Company.  Hyundai owned a 51% share of the company surpassing Ford Motor Company. Ever since then, the company has grown in leaps and bounds and has marked its name in golden letters in the automobile industry.

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SWOT Analysis Of KIA Motors

KIA Motors earns revenue of over 53.1 trillion KRW by producing around 3.2 lakhs units per year. Along with its parent company, the enterprise contemplates manufacturing technology savvy and eco-friendly vehicles to meet customer expectations and demands. Hence let us dive right into the SWOT analysis of this company.

1. Strengths

Strengths are defined as what each business does best to win over its competitors. Here are some of the strengths of KIA Motors.

• Leading Market Name

KIA has grown to be a household name in the automobile industry. It has achieved a lot of success due to its focus on passenger safety and innovation. Back in the year 2020, it was ranked number 1 for the sixth time in a row as the highest-ranked mass-market brand. Since it meets the customers' expectations in terms of safety, reliability and innovation, its position in the automobile sector keeps strengthening. 

• Attractive Portfolio

KIA Motors enjoys a comprehensive product portfolio with numerous offers in sports cars, sedans, coupes, SUVs, crossovers and passenger cars. Some of their recognizable brands are Forte, Sedona, Niro, Optima etc. This diversified product portfolio makes it a popular name among all the classes.

• Brand Positioning

KIA Motors holds a superior name in producing automobiles that are remarkable in performance and styling. It has a brand value of around 6.7 billion USD globally, up to 6.7% by 2021. The company has also registered its name in the top 50 car brands of the world. In the year 2020, it has managed to perform strongly in the US markets and expects to earn massive market shares by the year 2021.

• Price Strategy

KIA Motors involves a competing pricing strategy that helps the company acquire critical markets like India and the US apart from South Korea. Its car models are reasonably priced and appeal to most middle-class people. This is the reason for the massive sales of the Seltos model in India. With its diversified price portfolio, it manages to attract customers looking for a reliable and safe ride.

2. Weakness

These are the areas where the company needs to work on for improvement. Some key weaknesses of KIA Motors are highlighted below.

• Mediocre Reach

In contrast to its competitors, KIA has restricted itself to smaller firms and niches. This is why they cannot reach out to a larger audience, and hence its reach is extremely poor.

• Struggling Brand Identity

It is the second-largest manufacturer in South Korea. However, KIA is struggling to build a big brand name in the US and other global markets. As a result, it has failed to establish a positive image for itself in the USA and Europe. 

• Paradigm Shift

KIA used to deal with fleet vehicles earlier. But in recent years, it has decreased its demands for fleet vehicles and reintroduced them as a retail car brand. But, unfortunately, this might not be a productive strategy.

• Lack of Advertising Skills

Most of KIA's publicity owes to the word of mouth and marketing. They primarily own sponsorships of leading sports events like Formula 1 and ends up spending all their revenue on the promotional events. As a result, they completely lack the focus to advertise their products in the retail market.

3. Opportunities

This refers to the unexplored avenues and environments surrounding the business on which they can capitalize their returns. Some of the areas of opportunities for KIA Motors are:

• Market Potential

Research shows that markets like India and China can be potential revenue sources in the future years. This is because they are going to generate more demand and hence more revenue than Europe and the USA.

• Electrical Cars

With the approach of electric mobility, consumers are showing interest in electric vehicles. Governments are also emphasizing this change, and the results are pretty evident from Tesla's innovation. Therefore, investing in sustainable vehicle options can be the massive scope of revenue generation in the near future.

• Digital Marketing

Marketing and promotions of the car models are one of the leading aspects in today’s world. Most rival companies are focusing on research and development to enhance brand visibility. KIA Motors can bag huge sales if it focuses on improving its marketing strategies and advertising techniques.

4. Threats

These are environmental factors that can be detrimental to the growth of the company. Some of the potential threats are highlighted below.

• Intense Competition

The rival industries have been intensifying the competition in the global market. Technological innovation and demand growth in the middle classes has made the companies defend their market shares aggressively. The increase in income for the middle-class people has given rise to the affluent acquisition of luxuries. Therefore if the company wants to sustain itself in the rigorous market, it should focus on expanding its product portfolio to satisfy consumer demands.

• Impact Of COVID 19

Apart from disrupting supply chains and stalling production, the pandemic has changed the dynamics of the automobile industry. To survive fast changes, KIA Motors mind needs to address some troubling questions of the consumers. Moreover, to achieve more rapid growth after the pandemic, the company needs to focus on maintaining sync between its demand and supply chains.

• Regulatory Framework

With the rise in global warming and the depletion of fossil fuels, governments are becoming stricter. As a result, an astringent regulatory framework requires environmental compliance while adhering to the quality. Abiding by such laws can be an additional cost for the company.

PESTEL Analysis Of KIA Motors

KIA Motors is eyeing potential growth in the future. Therefore it is investing in electric cars and satisfying consumer demands during the pandemic. However, its growth and development depend on many factors. Here is the PESTEL analysis of the company. Then, we shall take a look at the factors that will shape the future of the company.

1. Political Factors

Political factors play an integral role in the position of enterprises in the world market. Therefore, companies need to be aware of the political influence on businesses in their operational markets. For example, the government of China directly influences the trade and business policies of the companies. Therefore KIA Motors face a challenge to rise and sustain in the Chinese markets due to complex tax and political structure.

2. Economic Factors

The sales and revenue generated depend mainly on the economic stability of the companies in the local and global markets. Unfortunately, due to the pandemic, the global market faced a massive recession. With people losing out on jobs and salary decrement, big car brands met a considerable decline and people categorized them as non-essential items. However, KIA Motors managed to pull out impressive sales regardless of the pandemic. They focused on innovation and consumer demands, gained higher sales, and generated more revenue.

3. Socio-Cultural Factors

The automobile industry needs to keep socio-cultural factors in mind while appealing to audiences of numerous cultures and societies.  For example, the millennials generation is more interested in stylish and performance-based automobiles. The reason the sale of SUVs has grown over the year is because of the millennials. Therefore it should change its marketing strategy to enjoy a better reach.

4. Technological Factors

With the rapid advancement in technology, there has been a thorough understanding of technological factors during decision making. KIA Motors need to capture the technological trends to achieve business advantages. The use of practical technological innovations and social media marketing can boost profitability and enhance operational efficiency.

5. Environmental Factors

The growth in environmental consciousness and the change in climatic conditions have made it necessary for companies to focus on actual products. The global presence of KIA Motors made it essential for them to consider various climatic conditions and renewable technologies to avoid extreme situations smoothly. Detailed analysis of the rules and regulations and the environmental standards of the particular market can be imperative in deciding the success of the new product line.

6. Legal Factors

Entering a new market without any knowledge of the regulatory structure and the legal environment can be a considerable challenge for KIA Motors. Therefore they need to carefully evaluate the legal aspects of the international market to avoid getting into some serious trouble. Ignorance of such standards can hurt the corporate image and deteriorate the competitive advantage of the company. It can also lead to the violation of consumer and environmental protection standards.

Conclusion

In the light of the above mentioned SWOT and PESTEL analysis, KIA Motors must focus on the most critical factors such as aggressive marketing strategy, determining the environmental and political factors for better growth. Involving these variables can influence strategic decision making and benefit the development of KIA Motors.

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