Kia maintains double-digit margin in Q1 with record revenue

Kia Corp., South Korea’s second-largest automaker, extended its double-digit profit margin streak to a 10th consecutive quarter, posting record quarterly revenue in the first three months of the year.

Hybrid and sports utility vehicles (SUVs), typically priced higher than other models, continued to fuel its sales growth. By region, Kia recorded double-digit sales gains in India and the Middle East, following the January launch of the Syros SUV, a model tailored for the Indian market.

The operating profit margin at Kia, an affiliate of Hyundai Motor Co., came in at 10.7% in the first quarter. Compared with the same period of last year, the figure dropped from 13.1%.

Dealer incentives offset gains from lower raw material costs and foreign exchange effects from a weaker won. In comparison, its bigger affiliate Hyundai Motor Co. also saw a dip in operating profit margins to 8.2% from 8.7% a year earlier.

“Our profit margin is about double the global carmakers’ average of 5%,” said a Kia official.

Its revenue climbed 6.9% on-year to 28.01 trillion won ($19.5 billion) in the first quarter. Operating profit decreased 12.2% on-year to 3.01 trillion won, but rose 10.8% from the previous quarter.

In the January-March quarter, Kia sold 772,648 cars, up 1.6% from the previous year.

Domestic sales dropped 2.4% following production halts of the K3 compact car and the Mohave SUV. However, overseas deliveries rose 2.5%, buoyed by strong demand in North America and India, offsetting weaker sales in Europe and Russia.

North America accounts for one-third of its global sales. India made up 5.3% of its first-quarter shipments, versus 4.6% in the year-earlier period.

ECO-FRIENDLY MODELS

Sales of eco-friendly cars such as hybrid electric vehicles (HEVs) jumped 10.7% on-year to 174,000 units worldwide, making up 23.1% of its total shipments in the first quarter.

“With rising demand for HEVs, we will enhance profitability and growth momentum by increasing HEV supply and raising average selling prices,” it said in a first-quarter earnings release presentation.

It plans to expand the HEV lineup, including hybrid versions of Sportage, Carnival and recreational vehicle Sorento, aiming to lift HEVs to 15% of sales this year.

 
OUTLOOK

Kia, under Hyundai Motor Group, expects challenging business conditions to persist, following the Trump administration's announcement last month of 25% tariffs on all imports to the world's largest economy.

“We are closely monitoring intensifying industry competition and the slowing EV demand,” the company said.

“We will maintain appropriate inventory levels through flexible, demand-driven production and protect profitability with a more efficient incentive strategy,” it noted.

To counter US tariff headwinds, Kia will ramp up production of its flagship EV models – EV6 and EV9 – at its US facilities.

Its global market share, excluding China, stood at 4.9% in the first quarter, compared with 4.7% a year before and 5.0% in the same period of 2023.

Write to Yeonhee Kim at yhkim@hankyung.com

Jennifer Nicholson-Breen edited this article.