Kia Australia to guarantee future value of EVs

Kia Australia will launch its own guaranteed future value (GFV) program nationally from next year, in a move the Korean brand hopes will help shield EV buyers from unknown depreciation prospects.

carsales has learned the Korean manufacturer will introduce its GFV program to market in early 2024 for those who lease their vehicle – mirroring programs already in place by the likes of Toyota, Ford, Mazda and Volkswagen, among many others.

GFV programs give lease buyers peace of mind by assuring the minimum return value of a vehicle at the end of a finance period to ensure it covers the final payment.

To qualify, a vehicle needs to be in sufficient condition, come under the agreed kilometre usage and be undamaged at the end of the lease.

At the completion of a lease term, owners generally have the option of upgrading to a new car, paying out a loan for the sum of the guaranteed future value and keeping the current car, or returning the vehicle to the dealer.

The advent of a GFV program coincides with the launch of the Kia EV9 this week.

Kia Australia chief operating officer Dennis Piccoli confirmed that work was happening behind the scenes.

“We’re looking at it right at the moment,” he said. “We were hoping to be able to launch it across all our range, including ICE, but at this stage it’s probably looking like it will be quarter one of 2024.

“There will be a GV [guaranteed value] across all our product.”

Like every EV manufacturer, Kia admits the prospects of EV depreciation are widely unknown in market – especially since most are covered by a limited battery warranty.

Kia is offering a seven-year/150,000km coverage for the battery of the EV9, which starts from $97,000 plus on-road costs.

But beyond that period, there is every chance future owners will be slugged with the cost of replacing modules in the vehicle’s hefty battery – the cost of which is unknown at the time of writing.

It means future values of EVs hang in the balance. But ultimately, so too do combustion vehicles amid the new electrified landscape.

Kia Australia CEO Damien Meredith explained future depreciation is a conundrum facing every EV manufacturer in Australia.

“We can only go off what’s happening with internal auctions within our dealer network. Right now the used car market has come back quite significantly,” Meredith told carsales.

“We’re about mid 80 per cent mark with all our product [of the original value calculated after three years of ownership], and the EVs that have gone through are about three per cent less than that.

“There’s not enough critical mass out there to tell what’s really happening with EVs.”

Meredith admitted the depreciation prospects of EVs beyond their battery warranty period is particularly volatile – and above all else, unknown.

“It’s a brave new world, and to be quite honest I don’t think anyone really knows what’s going to happen to values beyond that point,” he said.

“I’d like to know what happens with normal cars going to the future – [let alone EVs]. We just have to wait and see.”

Piccoli believes Kia is relatively well placed among EV manufacturers for resale locally.

“Anecdotally, what we’re hearing is the resale value percentages we’re getting at auction is quite [similar] to our internal combustion models, and better than what our opposition is getting,” he said.

“[But] It’s a free market and it’s likely to change.”

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