Kia Soars in 2Q... Quarterly Record High Sales and Operating Profit (Update)

Sales of 18.3395 trillion KRW and Operating Profit of 1.4872 trillion KRW... Up 61% and 924% Respectively

On the 15th, the new logo of Kia Motors was displayed on the exterior wall of Kia Motors' headquarters building in Seocho-gu, Seoul. The new logo removes the previous red oval border and presents the alphabet 'KIA' in a simple and futuristic style. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Yu Je-hoon] Kia has overcome the vehicle semiconductor supply shortage in the second quarter to achieve the highest quarterly sales and operating profit in its history. Kia announced on the 22nd that it recorded consolidated sales of 18.3395 trillion KRW and operating profit of 1.4872 trillion KRW in the second quarter. These figures represent increases of 61.3% and 924.5%, respectively, compared to the same period last year.

According to Kia, total sales volume in the second quarter reached 754,117 units (wholesale basis), up 9.3% year-on-year. Overseas markets recorded 605,808 units, an increase of 70.9%. Strong recovery was seen as sales of key models increased in Europe, India, and Latin America, regions severely affected by COVID-19 last year. In North America, industrial demand recovery and new model effects from Sorento and Carnival drove sales growth. However, sales in China declined due to model aging of key models such as Zhipao.

Domestic market sales were limited to 148,039 units, down about 8.2%. Kia explained, "The domestic market decreased compared to the second quarter of last year, which saw a significant sales increase due to the individual consumption tax reduction effect," adding, "This year, especially, production disruptions occurred in domestic sales models due to the global semiconductor supply shortage, making it impossible to avoid sales decline."

Additionally, the cost of sales ratio improved by 3.5 percentage points year-on-year to 81.3%, due to increased sales and improved product mix leading to higher average selling prices. The operating profit margin was 8.1%. The company also noted that the proportion of high-profit leisure vehicles (RVs) sales increased by 2.8 percentage points to 56.5%, contributing to profitability improvement.

Kia forecasts continued demand rebound in the second half of the year due to the COVID-19 base effect but views the resurgence of COVID-19 in some markets, global semiconductor shortages, and rising raw material prices as ongoing challenges. In particular, the global semiconductor supply shortage is expected to persist beyond the third quarter.

Accordingly, Kia plans to minimize production disruptions through continuous efforts to secure alternative components, proactive inventory buildup via annual orders, expansion of local parts sourcing, diversification of suppliers, and flexible production plan adjustments. A Kia official stated, "Despite some production disruptions due to semiconductor shortages and an unfavorable exchange rate environment, we continued to expand profitability through a surge in global market demand as the impact of COVID-19 eased and improved product mix by expanding sales of high-profit new models," adding, "In the second half, we will further enhance competitiveness in the RV and electric vehicle markets with the successful launch of key new models, the new Sportage and EV6."

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