Kia posted a record third quarter sales revenue this year, driven primarily by aggressive sales of ecofriendly vehicles, expanding its market presence in key global markets, including the US, despite the downturn in industry demand.
In a quarterly earnings release on Friday, Kia said in the July-September period, its revenue rose 10.1 percent to 31.6 trillion won ($23.69 billion). It marked the highest third-quarter figure on record.
The increase was largely driven by rising sales of hybrid electric vehicles and electric vehicles in the US and Europe.
Its operating profit inched up 24.3 percent to 1.82 trillion won, respectively, from the previous year. Operating margin improved by 0.7 percentage points to 5.8 percent in the same period.
The company attributed the surge in operating profit to a base effect from last year, when earnings plummeted due to the impact of US tariffs. Tariff expenses dropped from 1.23 trillion won in the third quarter of last year to 701 billion won this year. Excluding tariff expenses, operating profit actually declined from 2.7 trillion won to 2.52 trillion won.
Despite the drop in profitability, Kia’s global market share hit a record high of 4 percent — when excluding China, 5 percent — with six out of nine regions, including Korea, the US, Western Europe and India, improving market presence.
Kia said ecofriendly vehicle sales drove the overall growth. In the third quarter, combined sales of hybrids, plug-in hybrids and battery electric vehicles surged 47 percent year-on-year to 300,000 units.
Notably, hybrid sales in the US skyrocketed 118 percent and EV sales in Western Europe soared 163 percent, three to four times the growth in the domestic market.
Kim Seung-jun, head of Finance & Accounting Division at Kia, noted that while the company remained on track to meet its annual sales volume target of 3.35 million units due to solid demand in major markets, the full-year operating margin will likely fall short of the initial guidance of 8.3 percent.
Kim emphasized that Kia was doubling down on its EV expansion in Europe despite near-term pressure on margins, with an aim to match hybrid vehicle profitability within two to three years through aggressive cost reductions across battery packs, electric motors, heat pumps, thermal management and core power electronics systems.
“Surviving in Europe without strong EV sales is simply impossible,” said Kim during the conference call. “Backing away from EVs due to short-term decline in margins is not the right strategy.”
Kia is also considering shifting EV production locally to Slovakia while exporting internal combustion engine vehicles from Korea to Europe.
Addressing concerns over whether Kia can keep pace with Tesla and Chinese rivals on software-defined vehicles while cutting EV costs, Kim stressed that cost reduction would not come at the expense of innovation.
“Our EV cost-reduction roadmap fully incorporates advanced autonomous capabilities, including Level 2+ and beyond,” Kim said. “Lowering manufacturing costs does not mean putting software development on hold.”
hyejin2@heraldcorp.com
