Kia Motors, How Much Will Car Sales Decrease This Year?

[Image source=Yonhap News]

[Asia Economy Reporter Koh Hyung-kwang] Hana Financial Investment on the 26th forecasted that Kia Motors' sales and performance would decline after the second quarter this year due to the impact of the novel coronavirus disease (COVID-19).

Song Seon-jae, a researcher at Hana Financial Investment, said, "The first quarter performance this year exceeded market expectations thanks to an increase in sales volume based on new cars, mix improvement, and exchange rate effects." However, he added, "Due to the spread of COVID-19, demand in major global markets sharply declined after mid-March, and overseas factories temporarily suspended operations, so sales and performance forecasts after the second quarter inevitably have to be revised downward."

Accordingly, Hana Financial Investment lowered Kia Motors' global sales forecast from 2.79 million units to 2.62 million units and also cut the annual operating profit forecast from 2.07 trillion won to 1.57 trillion won.

Researcher Song explained, "Overall, there is much uncertainty regarding global market demand and production forecasts after March. Europe resumed factory operations after the 24th of this month, and the United States and India are scheduled to resume from the 3rd of next month, but this is flexible depending on the spread of COVID-19."

He added, "The average operating rate of dealers is about 50%, and since it is necessary to observe how quickly demand recovers, the speed of actual sales and performance recovery will be slower than factory operations."

Additionally, Researcher Song predicted, "The schedule for new car launches will also be readjusted according to the pace of market demand recovery by region. The Sorento in the U.S. has been postponed from August to September, the Carnival from the end of this year to next year, and the Sonet, a small SUV in India, will also be adjusted within the second half of the year."

Meanwhile, Kia Motors held an investor relations (IR) session at its headquarters in Yangjae-dong, Seoul, on the 24th and announced its first-quarter 2020 management performance. Sales amounted to 14.5669 trillion won, a 17.1% increase compared to the same period last year, but operating profit was 444.5 billion won, down 25.2%.

Regarding sales volume, domestic sales showed growth, but the slump in overseas markets became apparent, pulling down overall performance. Domestic sales were 116,739 units, up 1.1% year-on-year, while overseas sales decreased by 2.6% to 531,946 units. Total sales volume was 648,685 units, down 1.9%.

This content was produced with the assistance of AI translation services.