Kia's Innovative Move: Guaranteed Future Value Program Set to Shield EV Buyers
Revolutionizing Resale: Kia Australia to Introduce Guaranteed Future Value Program
In a strategic move aimed at alleviating uncertainties around electric vehicle (EV) depreciation, Kia Australia is set to launch its own Guaranteed Future Value (GFV) program nationally in early 2024. The Korean automaker aims to provide peace of mind for EV buyers who have been grappling with the unknowns of depreciation, especially concerning EVs.
Understanding Guaranteed Future Value Programs
GFV programs, already established by other automotive giants like Toyota, Ford, Mazda, and Volkswagen, offer lease buyers a sense of security by ensuring a minimum return value for their vehicle at the conclusion of the finance period. The program mandates that the vehicle must be in good condition, adhere to the agreed-upon kilometer usage, and be free from damage at the end of the lease. Upon completing the lease term, owners typically have the option to upgrade to a new vehicle, pay off the loan for the guaranteed future value and keep the current car, or return the vehicle to the dealer.
The launch of Kia's GFV program coincides with the introduction of the Kia EV9 this week, reflecting the brand's commitment to addressing the evolving needs of the automotive market.
Navigating EV Depreciation Challenges
Kia Australia's Chief Operating Officer, Dennis Piccoli, confirmed that the company is actively working on implementing the GFV program across its entire range, encompassing both internal combustion engine (ICE) and electric vehicles. However, it is anticipated that the program will be officially rolled out in the first quarter of 2024.
Given the unpredictable nature of EV depreciation, particularly as they transition from limited battery warranties, Kia's move is seen as a strategic response to an industry-wide conundrum. The seven-year/150,000km battery coverage offered for the EV9, starting at $97,000 plus on-road costs, provides initial security. Still, concerns arise about potential costs for replacing modules in the substantial battery beyond the covered period.
Kia Australia CEO Damien Meredith acknowledged the challenge, emphasizing the uncertainty facing every EV manufacturer in Australia. He pointed out that the used car market has experienced a significant decline, with EVs showing approximately three percent less depreciation than internal combustion models after three years of ownership. Despite this, Meredith stressed that the post-warranty depreciation of EVs remains an enigma in this brave new world of automotive innovation.
Kia's Competitive Position in the EV Market
Dennis Piccoli expressed confidence in Kia's relative resilience in the EV resale market, stating that the resale value percentages at auction are comparable to internal combustion models and even exceed those of some competitors. Nevertheless, he acknowledged the dynamic nature of the market and the need to adapt to changing conditions.
In conclusion, Kia's venture into the Guaranteed Future Value program underscores its commitment to assuaging concerns related to EV depreciation and supporting buyers as they navigate the evolving landscape of automotive technology. As the industry awaits the official launch, Kia positions itself as a trailblazer in providing innovative solutions for the challenges posed by the transition to electric vehicles.