SERVICE CONFERENCE 2006

ORLANDO, FL, USA

JULY, 2006

KIA MOTORS DO BRASIL

QUALITY CORE MEETING

José Alli Essmael Filho, Technical Manager

Brasil – General Information

Population : 186.500.000 inhabitantTotal Length : 4,394 Km (North to South)

4,319 Km (East to West)Total Area : 8,5 million sq kmLanguage : PortugueseCapital : Brasília - DF

Federation : 5 regions, 27 states

Brasil – Fleet Information

Average Vehicle Age : 9.4 years (similar to

USA)

Average Vehicle Mileage a year : 22,000 Km

National Fleet : 23 million (2005) Age (years) Fleet (%)1 ~ 3 20%4 ~ 5 12%6 ~ 10 30%

11 ~ 15 21%16 ~ 20 11%

21 ~ 6%Total 100%

Vehicles Mix (%)Light passenger 80%

Light commercial 14%Truck 5%Bus 1%

Total 100%

Brasil – Transportation

Inland transportation (intercities)

By train: insignificant

By plane: still expensive and inaccessible to most people

By river: insignificant

By bus: cheap and efficient, most popular transport vehicle

By car: widely used but quite expensive due to fuel and toll

fees

City transportation

By train: important in São Paulo city and others major cities

By subway: important, modern and efficient in São Paulo city and

others major cities, but not sufficient

By bus: main transportation vehicle

By car: most popular, accessible to many; causes huge traffic jams in

big cities (over 1 million people)

Brasil – Demografic distribution

Population : over 186 million

Major part of population are concentrated in coastal and

South and Southeast Regions

50% of total population lives in São Paulo and neighbour states

Brasil – Dealers Distribution

44 Independent Dealers

Brasil – Vehicles Line-up

Pregio Up to 2005

K2700 Current

Sorento (2.5 DSL and 3.5 DSL) Since 2004

New Sportage (2.0 GSL and 2.7 GSL)

Since 2005

Old Carnival (2.5 GSL and 2.9 DSL) From 1999 to 2005

Opirus (3.5 GSL) Since 2005

Cerato (1.6 GSL and 2.0 GSL) Since 2006

New Magentis (2.0 GSL and 2.7 GSL)

Launch on July/2006

New Carnival (3.8 GSL) Launch on July/2006

Picanto (1.1 GSL) Launch on Oct/2006

Brasil – Climatic Features

Cold winter,Nice summer

Hot summer,Dry,

No winter

Hot summer,High humidity

No winter

Moderate weather

Effects:

Cold RegionAll Vehicles – Battery problemsSorento Diesel – Engine hesitation due thefuel filter clogged

Hot Region Engine overheating (Pregio, Old Sportage)

Brasil – Climatic Features

Brasil – Road Condition

Belgian roads – found in some streets yet

Repaired Asphalt – common situation in several streets

Brasil – Road Condition

Repaired and cracked Asphalt – common situation on several streets

Speed bumpers – widely used in all cities

Brasil – Road Condition

Belgian road;

repaired or cracked

asphalt;

uneven asphalt .

Though most streets of the main cities

are paved, repair spots to fix holes are

common situation. Cracks due to bad

quality asphalt or uneven pavement

after asphalt repair are also part of

Brazilian streets scenary.

Effect: Noise and vibration felt while

driving under low speed.

Main vehicles affected:

Magentis MG / Sportage KM /

Sorento

Brasil – Fuel

Petrobras – Governmental company responsible for exploration and refine

of crude petroleum. By law only Petrobras can explore petroleum in Brasil.

In 2006 Brasil became self-sufficient in petroleum volume.

Petrobras is pioneer in deep water exploration technology and dedicate to

research of natural fuels such as Alcohol and Biodiesel.

P50 - Plataform

Brasil – Fuel

Distributor Companies – Several private companies are

responsible for fuel distribution (supplied by Petrobras) to

gas stations.

(e.g.: Shell, Texaco, Esso, Ipiranga, Repsol, etc)

Brasil – Fuel

In Brasil “gasoline” is not available but “gasohol” instead.

Gasohol

is obtained by blending pure gasoline and alcohol at 75%-

25% in

volume. Alcohol raise octane level instead of lead.

Types of Gasohol:

Common: 87 octanes

Premium: 91 octanes

Podium: 95 octanes

Gasohol

Brasil – Fuel

Alcohol

Fuel derived from sugar cane and 100% produced in Brasil. This fuel

is considered “ecological” as it is self-renovating and show better

emission results. Brasil is most advanced country in alcohol-engines

technology.

Brasil – Fuel

Flexfuel

Recently developed vehicle that may use either gasohol or alcohol

or both mixed in any proportion.

Engine ECU automatically calibrate injection time and ignition time

for any blended fuel by receiving O2 sensor data.

Use of alcohol or gasoline in Flexfuel vehicles lays on economy

balance.

These vehicles has become popular quickly. From January to

June/2006, 76.3 % of the sold vehicles in Brasil are Flexfueled.

Diesel available in Brasil is Biodiesel. Biodiesel is a blending of

mineral diesel with vegetal oils. This Biodiesel was introduced in

2005 and it is a great bet of Brazilian government to develop

agriculture.

98% Diesel derived of petroleum 2% Biodiesel

This proportion is planned to be increase gradually to 80%-20%

until 2020.

Brasil – FuelDiesel

Three types of Biodiesel are supplied in Brasil:

Common Diesel – Sulphur value is 3,500 PPM

Metropolitan Diesel – (S2000) Sulphur value is

2,000 PPM, distributed exclusively on major

cities

Diesel 500 – (S500) Sulphur value is 500 PPM,

distributed exclusively in major cities and with

critical quality of air due excessive number of

vehicles

Brasil – FuelDiesel

In Brasil only heavy duty, commercial and off-road vehicles may

use diesel. This is because diesel is bore by government to incentive industrial and commercial activities.

Brasil – FuelDiesel

Brasil – Fuel

Vehicles adapted to use natural gas besides original fuel (gasohol

or alcohol). For its low operational cost is highly used for fleet

companies and taxis that ride long distances daily.

The use of GNV is restricted by big gas tanks that must be installed,

usually in trunks. GNV demand larger tanks than LPG.

Natural Gas - GNV

Brasil – Fuel

Fuel usage – current national fleet

Gasohol: 71%Diesel: 10%Alcohol: 14%Flexfuel: 5%

(Natural Gas: 3%)

Brasil – General Regulations

Speed Limits:Up to 120 Km/h in highwaysUp to 60 Km/h in urban areas

Due to intensive speed control by radar allied to high

penalties, speed limits are generally respected.

Brasil – General Regulations

Emission:

Brasil has its own Emission Control Legislation named

PROCONVE.

It blends both European and US standards and government

control

on vehicle emissions is strict.

Current Brazilian standards for emission are named

CONAMA L4

for Light Vehicles and CONAMA P5 for Heavy Duty.

In comparison with international legislation, Brazilian

emission

limits are similar to US Tier 1 for LPV/LCV and similar to

Euro-III

for Heavy Duty.

Customer Protection Legislation

Brasil has one of most advanced Customer Protection Legislation. It means that any customer can claim for

his rights and he will be supported by law.

Normally all demands use to be in favour of customer who is

judged weaker part in trade relation.

So all companies do their best to avoid customers to go to the

court as judge decisions may cost more than original demand.

Brasil – General Regulations

Brasil – Market

Local Makers

Brasil hosts 20 different makers, being one of major automotive industries in

the world.

Our automotive industry started in back 1950’s. For this Brazilians have a very strong automobile culture, with general good

understanding of mechanical concepts. Additionally there are several options of

specialized magazines with huge number of readers.

For this Brazilian customer became very demanding. They don’t accept

any explanation for their cars problems without arguing besides they have a

lot of options in the market for their next buying, and they make it clear very

well when needed.

Brasil – MarketAutomotive media

Brasil – MarketMakers

                                                                                                                                         

Brasil – MarketImporters

                                                                                           

                                             

Brasil – Major Customers Complaints

Due to local road conditions vehicles show a high level of

noise compared to local made vehicles.

In coastal areas (high saltiness), corrosion in metal sheet,

mainly on K2700

Sorento Diesel with many problems in fuel system (injectors, fuel tank, fuel filter)

Several occurences of differential set broke in K2700

Brake judder problems are common to all models (mainly

on Sorento and K2700)

Several battery problems, mainly in Winter season

Sorento with lock doors problems (reoccurrences)

Brasil – Major Customers Complaints

Brasil – Problems with Sorento CRDI

All cases mentioned above are still “under investigation” by KMC

Fuel Injector – 62 cases

Complaint: Engine hesitation, irregular idle speed and noise from combustion chamber

Cause: Injectors with fuel supply irregular

Fuel Tank – 29 cases

Complaint: Engine hesitation

Cause: Loosen coating material from fuel tank

Fuel Filter – 26 cases

Complaint: Engine hesitation

Cause: Fuel flow through filter interrupted with no apparent cause

THANK YOU !THANK YOU !

MUITO OBRIGADO !MUITO OBRIGADO !