The document summarizes the strategies implemented by Kia Motors do Brasil to improve customer satisfaction (CSI) scores between 2005-2006. Key strategies included identifying causes of low CSI through customer feedback, repositioning the Kia brand from commercial to passenger vehicles, improving dealer facilities, personnel training, communication between Kia and dealers, and being more proactive with customer service and follow-up. These efforts led to significant improvements in CSI scores and the overall Kia business in Brazil.

1. SERVICE CONFERENCE 2006 ORLANDO, FL, USA JULY, 2006 KIA MOTORS DO BRASIL José Alli Essmael Filho, Technical Manager

2. SUBJECT: Based on 2005-2006 CSI results “ CSI IMPROVEMENT – CASE STUDY”

3. 1) IDENTIFYING CAUSES OF LOW CSI Presentation structure: 2) UNDERSTANDING KIA BUSINESS 3) CSI IMPROVEMENT STRATEGIES 4) RESULTS AND IMPROVEMENTS ACHIEVED

4. 1) IDENTIFYING CAUSES OF LOW CSI

5. STEP 0: “HOW TO IDENTIFY REASONS FOR LOW CSI SCORE ?” 1) IDENTIFYING CAUSES OF LOW CSI Considering different point of views CUSTOMER VOICE CSI results Call Center statistics DEALERS VOICE Dealer interview TSI results Field engineer report DISTRIBUTOR VOICE Internal meetings History analysis Local brands benchmark

6. “ MAIN REASONS FOR LOW CSI SCORE” AFTER GATHERING INFORMATION FROM DIFFERENT SOURCES... 1) DEALERS FACILITIES ARE POOR AND NOT FRIENDLY 1) IDENTIFYING CAUSES OF LOW CSI 2) MANPOWER QUALITY IS INADEQUATE 3) CUSTOMERS DON´T FEEL VALUED BY KIA

7. 2) UNDERSTANDING KIA BUSINESS BY 2004

8. WHOLESALES DROPPED 86% FROM 2000 TO 2004 KIA BUSINESS SHRANK DUE TO SALES DROP 2) UNDERSTANDING KIA BUSINESS BY 2004 15,400 YEAR 2000 2,140 YEAR 2004

9. 20% OF DEALERS HELD 80% OF SALES KIA BUSINESS SHRANK DUE TO SALES DROP 2) UNDERSTANDING KIA BUSINESS BY 2004

10. 20% OF DEALERS HELD 80% OF SALES KIA BUSINESS SHRANK DUE TO SALES DROP 2) UNDERSTANDING KIA BUSINESS BY 2004 15 SALES/MONTH = 2 SALES/MONTH =

11. 20% OF DEALERS HELD 80% OF SALES KIA BUSINESS SHRANK DUE TO SALES DROP 2) UNDERSTANDING KIA BUSINESS BY 2004 LESSON #1: “ WHEN MARKET BECAME MORE COMPETITIVE, PARTICULARY DUE TO PREGIO MARKET SHRINKAGE, MOST DEALERS WERE NOT PREPARED FOR THIS SITUATION. ” SO WE CAN´T MAKE IMPROVEMENT PLAN EVENLY FOR ALL DEALERS.

12. DEALER EVALUATION REQUIREMENTS BECAME EXCESSIVE KIA BUSINESS SHRANK DUE TO SALES DROP 2) UNDERSTANDING KIA BUSINESS BY 2004 DEALER EVALUATION REQUIREMENTS WERE CONCEPTED FOR MINIMUM RETAIL SALES OF 240 VEHICLES/YEAR. SO OUR STANDARDS ARE NO LONGER APPLIED TO NEW SITUATION.

13. HISTORICALLY, COMMERCIAL VEHICLES HOLD 75% OF TOTAL SALES KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELS 2) UNDERSTANDING KIA BUSINESS BY 2004 Facilities requires larger areas Technicians are skilled in diesel Customers demmands are different For commercial vehicles: Knowledge in electronics is not mandatory

14. PREGIO WAS BEST SELLER EVER KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELS 2) UNDERSTANDING KIA BUSINESS BY 2004 Market for vans shrank to the government restrictions Competition became stronger and varied Finally, Pregio production is interrupted

15. DEALERS START TO DEAL WITH MORE DEMMANDING CUSTOMERS KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELS 2) UNDERSTANDING KIA BUSINESS BY 2004 More expensive cars attracted more sophisticated customers Appearance, organization, cleaning and behaviour became more relevant issues What pleased commercial vehicles customers may not work with new customers

16. SKILLED STAFF FIRED OR REPLACED BY LESS QUALIFIED PEOPLE PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER 2) UNDERSTANDING KIA BUSINESS BY 2004 Skilled staff became expensive as sales decreased Unexperienced technicians were hired to reduce workshop costs Training efforts were not so effective as new employees could not follow high level instructions

17. TECHNICIANS AVAILABILITY FOR TRAINING IS LOW PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER 2) UNDERSTANDING KIA BUSINESS BY 2004 Workshop staff reduced for cost cutting Every technician become overloaded In some dealers, one technician may mean 50% of workshop staff Training costs for dealers become significant

18. DEALERS SPENT LESS MONEY TO KEEP FACILITIES DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) 2) UNDERSTANDING KIA BUSINESS BY 2004 Dealers cancelled most facilities maintenance Building front appearance has become poor and wrecked Lesson #2: “ EVERYBODY WANTED TO MAKE MONEY BEFORE MAKING ANY IMPROVEMENT, WHEN ACTUALLY, IMPROVEMENTS WERE NEEDED TO BRING MONEY BACK .”

19. IMPROVEMENT PLANS SUGGESTED BY KIA NOT COMPLIED BY DEALERS DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) 2) UNDERSTANDING KIA BUSINESS BY 2004 Improvement plans were based on former Dealer Evaluation Form Long-term and comprehensive plans were firmed between Kia and dealers Plan follow up only in every Field Engineer visit to dealer (1 or 2 times a year) Each Improvement Plan has about 40 items to be complied by dealer in 8 months (in average)

20. LOSE-LOSE GAME... DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) 2) UNDERSTANDING KIA BUSINESS BY 2004 SALES DROP STAFF CUT STOP TRAINING CANCEL INVESTMENT IGNORE IMPROVEMENT PLAN

21. LOW PROACTIVE SUPPORT FROM KIA TO CUSTOMERS CUSTOMERS WERE NOT TOUCHED BY KIA 2) UNDERSTANDING KIA BUSINESS BY 2004 Relationship between Kia and customers ended after car sale Communication resumed to customer complaint to Kia Call Center Although customers always could count on Kia support, they expected more – they wanted to be more valued as a Kia customer

22. DIFUSE COMMUNICATION POOR COMMUNICATION BETWEEN KIA AND DEALERS 2) UNDERSTANDING KIA BUSINESS BY 2004 Several ways of entry caused missing information Targeted people often not reached Service information found in several sources – not concentrated Lesson #3: “ COMMUNICATION IS IMPORTANT BUT THERE MUST HAVE A FLOW .”

23. 3) CSI IMPROVEMENTS STRATEGIES

24. NEW DEALER EVALUATION FORM ESTABLISHED KIA BUSINESS SHRANK DUE TO SALES DROP 3) CSI IMPROVEMENTS STRATEGIES 2 EVALUATION AREAS BEFORE Facilities Tools 5 EVALUATION AREAS AFTER Facilities Tools Organization Personnel Service Marketing 323 ITEMS 161 ITEMS Evaluation focus changed from “Quantity” to “Quality”

25. 20% OF DEALERS HELD 80% OF SALES KIA BUSINESS SHRANK DUE TO SALES DROP REGULAR IMPROVEMENT PLAN EMERGENCY IMPROVEMENT PLAN (BASED ON NEW EVALUATION FORM) AFTER 6 MONTHS... GOOD OPERATION (10 DEALERS) UNDER RECOVERY (23 DEALERS) NO IMPROVEMENT (33 DEALERS) CASES DELIVERED TO KIA TOP MANAGEMENT FOR LEGAL ACTIONS 3) CSI IMPROVEMENTS STRATEGIES

26. DEALERS NOMINATION PROCESS BECAME STRICTER KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELS 2) UNDERSTANDING KIA BUSINESS BY 2004 Only candidates with recognized experience are accepted Technicians must be trained before opening Candidate must comply with all requirements with no concessions Dealer Pre-Opening Procedure for After Sales is established All requirements are based on new Dealer Evaluation Form

27. SOME EXAMPLES OF DEALERS RECENTLY NOMINATED KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELS 3) CSI IMPROVEMENT STRATEGIES

28. PRE-REQUIREMENTS FOR MODELS SALES KIA BRAND SHOULD BE REPOSITIONED FROM COMMERCIAL TO PASSENGER AND SUV MODELS 3) CSI IMPROVEMENT STRATEGIES To be able to receive a model for sale, dealer must comply with following requirements: Hi-Scan Pro must be available and updated SST set for new model must be acquired Best technician must attend new model training

29. TECHNICIAN RECONIGTION PLAN INTRODUCED PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER Trainee, Certified, Expert and Master are 4 TRP grades To be upgraded technician must be approved in a test All technicians (204) are graded according to their experience Skilled technicians were preserved after Kia have endossed their knowledge 3) CSI IMPROVEMENT STRATEGIES

30. REGIONAL TRAINING OFFER INCREASED PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER Kia increased Regional Training offer from 2 to 6 a year By this, dealers from North, Northeast and South areas (far from Kia Training Center) could reduce training costs up to 80% Field engineers were prepared to give OJT training Kia offer annually 240 hours of Regional Training, besides those of OJT training 3) CSI IMPROVEMENT STRATEGIES

31. TRAINING QUALITY IMPROVED FOR BETTER EFFICIENCE PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER Regular training offer increased Kia Training Center fully equipped attracted technicians and improved practices quality 2003 80 TRAINEES 2005 224 TRAINEES 3) CSI IMPROVEMENT STRATEGIES

32. SKILL CUP AS A MOTIVATION TOOL PERSONNEL QUALIFICATION DROPPED DUE TO INCORRECT TURNOVER Skill Cup introduced in 2004 Since then we gathered best technician to compete for National contest 3) CSI IMPROVEMENT STRATEGIES Prizes and national recognition has become excellent motivation for technicians

33. MORE ACHIEVABLE DEALERS IMPROVEMENT PLANS DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) New Dealer Improvement Plan model is shorter and objective A low-medium investment is demmanded 3) CSI IMPROVEMENT STRATEGIES Emergency actions – cleanliness, painting, organization – are prioritized These short-term plans are checked every three months at latest – they are named “Quarterly Improvement Plans”

34. MORE ACHIEVABLE DEALERS IMPROVEMENT PLANS DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) 3) CSI IMPROVEMENT STRATEGIES FORMER PLAN ITEMS 40 PERIOD 8 MONTHS COMPLIANCE 20 ~ 25 % NEW PLAN 12 3 MONTHS 65 ~ 75 %

35. ACT SMART CAMPAIGN IMPELLED DEALERS AND EMPLOYEES TO CHANGES DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) Act Smart Campaign is very effective in dealers keeping and recovery process 2003 8 DEALERS 2005 24 DEALERS Dealers and employees are proud of improvements they make Number of participants increase year by year 3) CSI IMPROVEMENT STRATEGIES KMB awarded with bronze medal for its participation in last A/S campaign

36. INCENTIVES FOR HI-SCAN PRO AND SST AQUISITION DEALERS INVESTMENT IN KIA DECREASED (MOST DEALERS WERE NOT MAKING MONEY) KMB divided SST and HSP payment to help dealers acquisition 3) CSI IMPROVEMENT STRATEGIES No profits on SST, HSP or any material sale to support service operation As a result, all dealers are now equipped with Hi-Scan Pro and most dealers own full set of SST (211 item in total)

37. KIA CUSTOMER FOLLOW-UP SYSTEM INTRODUCED CUSTOMERS WERE NOT TOUCHED BY KIA KIA designed a follow-up system for dealers to hear their customers Customer receive a follow-up phone call up to 2 days after service done 3) CSI IMPROVEMENT STRATEGIES Actions taken by Service Manager are monitored by KIA This apparently simple action has a very positive impact among customers

38. SERVICE MARKETING ADDED TO DEALER EVALUATION FORM CUSTOMERS WERE NOT TOUCHED BY KIA 27 items for Service Marketing are evaluated 3) CSI IMPROVEMENT STRATEGIES CUSTOMER F/UP Follow-up calls Corrective actions Feedback PROMOTION AND ADV. Direct mail Signboards Outdoors Campaigns CUSTOMER CONVENIENCE Free towing service Adequate waiting room Early bird service Rental car

39. PROACTIVE USE OF CSI SURVEY AS A MARKETING TOOL CUSTOMERS WERE NOT TOUCHED BY KIA 3) CSI IMPROVEMENT STRATEGIES KIA ASSOCIATED WITH ESPM – SUPERIOR SCHOOL OF MARKETING (2004) & FAAP – FUNDAÇÃO ARMANDO ÁLVARES PENTEADO (2005) , FAMOUS UNIVERSITIES FOR BUSINESS ADMNISTRATION KIA CSI SURVEY IS CONDUCTED BY THESE PARTNERS UNDER KIA SUPERVISION THIS ASSOCIATION BRINGS TO BOTH KIA AND UNIVERSITY A VERY POSITIVE BRAND FEEDBACK 2004 Contacted customers Surveys collected PHONE CALL INTRODUCTION SPEACH IS: “KIA MOTORS DO BRASIL IN ASSOCIATION WITH OUR UNIVERSITY WANTS TO HEAR CUSTOMER VOICE” University 1050 180 ESPM 1200 300 FAAP 2005

40. SERVICE CLINIC SHOWS ACTIVE FACE OF KIA CUSTOMERS WERE NOT TOUCHED BY KIA 3) CSI IMPROVEMENT STRATEGIES Participating dealers Dealers understood importance of Service Clinics as a opportunity of keep and gain customers Main automotive media has released notes reporting Service Clinics Service Clinics has been an excellent way to tell customers that Kia cares Customers during Clinic 4 65 4 71 20 413 2003 2004 2005

41. SERVICE CLINIC SHOWS ACTIVE FACE OF KIA CUSTOMERS WERE NOT TOUCHED BY KIA 3) CSI IMPROVEMENT STRATEGIES Our main appeal to attract customer is a “Free Check-List” All customers who visit Kia dealers will be granted with a comprehensive inspection of 53 important items of vehicle maintenance Along with check-list form result, Kia dealer deliver full explanation of importance of correct maintenance and its consequences In addition all dealers offers free car wash, gifts and special promotional prices for services and parts

42. SOME ADS OF 2006 SERVICE CLINIC IN BRASIL CUSTOMERS WERE NOT TOUCHED BY KIA 3) CSI IMPROVEMENT STRATEGIES

43. SOME NEWS RELEASE OF 2006 SERVICE CLINIC IN BRASIL CUSTOMERS WERE NOT TOUCHED BY KIA 3) CSI IMPROVEMENT STRATEGIES

44. NEW EMAIL ADDRESSES CREATED POOR COMMUNICATION BETWEEN KIA AND DEALERS Concentrated information by reduced number of external emails 3) CSI IMPROVEMENT STRATEGIES BEFORE 9 individual emails 4 department emails + 13 ways of entry AFTER 1 training email + 1 quality email 1 manager email 1 secretary email + + 5 ways of entry 1 call center email + Quality reports Training application Customer complaints KMC communication Dealers communication

45. NEW QUALITY SYSTEM POOR COMMUNICATION BETWEEN KIA AND DEALERS Quality report standards established and new form developed 3) CSI IMPROVEMENT STRATEGIES BEFORE AFTER Only one way of entry is considered – email: qualidade@kia.com.br Kia is formally commited to answer any Quality Report within 48 hours This discipline estimulate dealers to report quality issues on time 22 reports/month 50 reports/month

46. FIELD ENGINEERS VISITING SCHEDULED INTENSIFIED POOR COMMUNICATION BETWEEN KIA AND DEALERS Field Engineers are links between Kia and dealers 3) CSI IMPROVEMENT STRATEGIES BEFORE AFTER To make their presence at dealer more constant is priority Particulary for those dealers carrying on recovery improvement plans, Engineers presence is very important 1~2 visits/dealer/year 4~5 visits/dealer/year

47. SERVICE MANUALS IN CD-ROM MADE COMMUNICATION AGILE POOR COMMUNICATION BETWEEN KIA AND DEALERS All Services Manuals are supplied in CD-Rom format with no cost 3) CSI IMPROVEMENT STRATEGIES BEFORE CD-Roms are produced and supplied to dealers immediately as manuals are available Additionally our costs with manuals reduced to 10% AFTER 6 months 30 days receipt of master file/translation/editoring/ revision/printing/delivery receipt of master file/preparation/recoding/ delivery

48. SERVICE DEPARTMENT CD-ROM POOR COMMUNICATION BETWEEN KIA AND DEALERS All Service information are condensated into a CD 3) CSI IMPROVEMENT STRATEGIES This CD is freely available to all dealers at anytime and it is updated periodically With this CD, Dealer Service Manager can check any information regarding Service BEFORE Manuals Bulletins Kia Website Booklets Training Material Data sheet AFTER 420MB

49. 4) RESULTS AND IMPROVEMENTS ACHIEVED

50. CSI EVOLUTION 4) RESULTS AND IMPROVEMENT ACHIEVED OUR CSI INCREASED 18 POINTS 63 79 61 80% 70% 66% 55% 64% 57% 2001 2002 2004 2005 2006 CSI FRFT Loyal Customer CSI reached 79 points. Also, FRFT & Loyal customer rate are 80% and 64% respectively. CSI and rate of FRFT and Loyal customer show improvement in comparison to the previous year

51. FRFT RATE TREND 4) RESULTS AND IMPROVEMENT ACHIEVED [Unit : %] ■ Trends from 2001 to 2006 OUR FRFT INCREASED 10 POINTS

52. RESUME 4) RESULTS AND IMPROVEMENT ACHIEVED A plural discussion is first step to understand how your business is going. Benchmark your competitors, all the time. Benchmark your partners. (In case of Kia, we have very good examples to follow) Listen to your dealers, listen to your customer, every day . Sometimes you can´t wait for feedback – act based on your experience .

53. THANK YOU ! MUITO OBRIGADO !