Kia’s Q3 profit soars; groupwide design centers revamped

Kia Corp., South Korea’s second-largest automaker, said on Friday that its third-quarter net profit rose fourfold from a year earlier thanks to strong sales of pricey models, improved product mix and favorable dollar-won exchange rates.

Kia, a unit of Hyundai Motor Group, posted 2.22 trillion won ($1.64 billion) in net profit in the July-September quarter, up 384% from 458.9 billion won in the year-earlier period.

Operating profit tripled to 2.87 trillion won on a consolidated basis from 768.2 billion won. Consolidated sales increased 10.3% year on year to 25.55 trillion won from 23.16 trillion won.

The sibling of Korea’s top carmaker Hyundai Motor Co. sold 778,213 vehicles globally in the third quarter, up 3.5% from a year ago. Domestic sales increased 1.1% to 134,251 units while overseas car sales rose 4% to 643,962 units.

Despite a sales decline in emerging markets such as India and Latin America, the company saw steady sales growth in North America and Europe.

By car type, sales of recreational vehicles (RVs) with higher margins accounted for 68.7% of its entire car sales in the third quarter.

Kia’s significant operating profit growth was also due to a low comparison base from the year-earlier period when Kia booked 1.5 trillion won in one-off quality costs related to faulty Theta engines.

Kia’s third-quarter operating profit margin rose by 7.9 percentage points from a year ago to 11.2%.

In the first nine months of this year, Kia’s net profit more than doubled to a record high of 7.16 trillion won. Operating profit rose 98.4% year on year to 9.14 trillion won and sales increased 19.1% to 75.48 trillion won with car sales volume rising 8.4% to 2.35 million units.

ADVANCED MARKETS TO LEAD Q4 SALES GROWTH

While expecting steady sales growth, particularly in advanced countries, Kia said it faces tough business conditions such as escalating tensions in the Middle East, as well as elevated interest rates and inflation for the rest of the year.

“We’ll try to improve profitability by focusing on RV models and eco-friendly vehicles,” said a Kia official.

In the domestic market, the company plans to expand sales of the K5 sedan and the Carnival van while launching the EV9, its largest electric SUV, in the US and Europe.

For the fast-growing Indian market, it will launch a revamped five-seater Sonet SUV. In China, the world’s largest auto market, Kia plans to launch the EV5, its first China-made all-electric vehicle.

In July, the company revised up its full-year operating profit target to 12 trillion won from 9.3 trillion won earlier, after reporting its best-ever quarterly earnings in the second quarter.

Its sales guidance for this year was also revised up to over 100 trillion won from 97.6 trillion won.

On Thursday, Hyundai Motor reported a third-quarter operating profit of 3.82 trillion won, higher than Korea’s largest company Samsung Electronics Co.’s 2.4 trillion won.

GROUPWIDE DESIGN TEAM RESHUFFLE

Hyundai Motor Group said on Friday it is restructuring its design team to lead the industry’s future mobility trends, including autonomous vehicles and robotics.

The group said it has merged its separate design centers, previously organized by the brand, into a single organization, the Global Design Center, under which it set up the Hyundai Genesis Global Design Division and the Kia Global Design Division.

Luc Donckerwolke, the group’s chief creative officer (CCO), will head the Global Design Center as the chief design officer while continuing his current role as the CCO.

SangYup Lee, chief of the Hyundai Design Center, will lead the Hyundai Genesis Global Design Division, while Karim Habib, head of the Kia Design Center, has been appointed as the chief of the Kia Global Design Division.

Hyundai Motor has been upgrading its car design under its design philosophy of “Sensuous Sportiness,” while Kia follows its design philosophy of “Opposites United.”

Hyundai’s standalone premium brand Genesis follows the “Athletic Elegance” design philosophy.

Write to Sungsu Bae at baebae@hankyung.com

In-Soo Nam edited this article.