Kia Motors Also Faces 'Corona Shock'... Q2 Operating Profit Plummets 73% YoY (Update)

Q2 Sales of 11.3688 Trillion KRW... 21.6% Decrease YoY
Operating Profit Drops 72.8% YoY to 145.1 Billion KRW

2021 Seltos (Photo by Kia Motors)

[Asia Economy Reporter Kim Ji-hee] Following Hyundai Motor Company, Kia Motors also could not escape the impact of the novel coronavirus disease (COVID-19) in the second quarter of this year. Sales in the second quarter recorded 11.3688 trillion KRW, down 21.6% compared to the same period last year, and operating profit for the same period fell 72.8% to 145.1 billion KRW.

Kia Motors held a conference call at its headquarters in Yangjae-dong, Seoul on the 23rd to announce these business results. Compared to the same period last year, operating profit decreased by more than 70%, with ordinary profit at 211.4 billion KRW (down 67.8%) and net profit at 126.3 billion KRW (down 75%).

A Kia Motors official explained, "As the global spread of COVID-19 intensified, demand sharply declined in all markets, creating difficult business conditions. Amid this, the expansion of sales proportions of high-profit new models and recreational vehicles (RVs), efforts to reduce fixed costs, and favorable exchange rate effects partially offset the impact of decreased sales."

Kia Motors' global sales in the second quarter recorded 516,050 units, down 27.8% from the previous year. Domestic sales were 161,548 units, down 26.8% from the same period last year, while overseas sales fell 39.7% to 354,502 units. In the domestic market, which was relatively less affected by COVID-19, sales increased significantly due to the new car effects of the K5, Sorento, and Seltos, as well as demand expansion from a 70% reduction in individual consumption tax. On the other hand, overseas markets saw a sharp decline in sales across all regions including the United States, Europe, and India, as factory operations and dealer sales activities were suspended.

By major overseas regions, North America recorded 122,799 units, down 40.3% from the second quarter of last year, and Europe recorded 69,103 units, down 50.6%. Other markets including Russia, Latin America, Africa & Middle East, and Asia sold 96,786 units, down 46%. However, sales in China increased by 5.3%.

Despite record-high domestic sales, an improved sales mix centered on RVs and new models leading to an increase in unit price, and a favorable KRW-USD exchange rate, second-quarter sales decreased 21.6% year-on-year due to a significant drop in global sales. However, the proportion of RV sales increased by 6.7 percentage points compared to the previous year, reaching a record high of 53.7%, thanks to steady domestic and overseas sales of popular models such as the Seltos and Niro, and strong domestic sales of the new Sorento.

Up to the first half of this year, Kia Motors' cumulative global sales totaled 1,164,735 units, down 15.4% from the previous year. During this period, sales amounted to 25.9357 trillion KRW, down 3.8% year-on-year, and operating profit was 589.6 billion KRW, down 47.7%.

Kia plans to secure competitiveness in the second half by focusing on sales capabilities centered on high-profit new models and managing production and sales capacity in preparation for demand recovery. Domestically, Kia will actively respond to demand contraction due to changes in individual consumption tax rates in the second half, focusing on new models such as the new Sorento, which has started hybrid sales, and the upcoming new Carnival. Overseas, Kia will concentrate on sales of the Telluride and Seltos, which are maintaining strong sales momentum, and will steadily introduce new models such as the new K5, Sorento, and Sonet (India's entry-level SUV) to continue the sales momentum.

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