Kia Sets New Records in Sales and Profit, Also Achieves Highest Car Prices and Profit Margins (Comprehensive)

Domestic and international sales at 734,000 units decreased from the previous year
but revenue reached a record high of 21.9 trillion KRW and operating profit 2.2 trillion KRW
Operating profit margin hits double digits for the first time... Sales price also at an all-time high

Kia Headquarters, Seocho-gu, Seoul

[Asia Economy Reporter Choi Dae-yeol] Kia announced on the 22nd that its IFRS consolidated operating profit for the second quarter of this year reached 2.2341 trillion KRW.

This marks a 50.2% increase compared to the same period last year, and it is the first time quarterly operating profit has exceeded 2 trillion KRW. It also far surpassed market expectations (1.8305 trillion KRW).

Second-quarter sales volume was 733,749 units (wholesale basis), down about 2.7% year-on-year, but revenue increased by 19.3% to 21.876 trillion KRW. Ordinary profit rose 42.8% to 2.6239 trillion KRW, and net profit increased 40.1% to 1.881 trillion KRW. Both revenue and operating profit hit quarterly records. The first quarter had previously set the highest revenue and operating profit, but new records were set again within just one quarter.

This performance is notable in several respects. The operating profit margin reached double digits for the first time at 10.2%. The average selling price (ASP) per vehicle was 31.4 million KRW (global basis), a 19.1% increase compared to the same period last year. Similarly, this is the first time the ASP has exceeded 30 million KRW. The domestic ASP was 31 million KRW, up about 9.6% year-on-year.

Busan International Motor Show Kia Exhibition Hall

The improvement in profitability was attributed to reduced incentives and a longer-than-expected period of Korean won depreciation. The effects of incentive reduction and exchange rates were each analyzed to be over 500 billion KRW.

Joo Woo-jung, Head of Kia’s Finance Division, said during the earnings conference call, "Despite challenges such as volume disruptions and rising raw material prices, the exchange rate had a favorable impact. Overall, considering vehicle pricing and incentive management, we believe we have established a foundation for profitability."

In the domestic market, despite strong sales of the new Sportage and EV6, production disruptions of key models due to semiconductor and other component shortages led to a 5.0% decrease compared to the previous year. Overseas, although the suspension of sales in the Russian region became apparent, Kia minimized sales disruptions by redirecting volumes to more profitable regions, switching the India plant to a three-shift system, and benefiting from new models such as the Carens (India) and the new Sportage.

Kia EV9 scheduled for release in April next year

The company stated that although the situation after the second half of the year remains challenging, it will make multifaceted efforts to maintain profitability. Vehicle prices will be raised in the third quarter to offset the increase in raw material costs experienced earlier this year. Software services are also expected to reach a level that generates visible profitability.

As brand competitiveness has improved, the company expects that the pace of incentive increases will not be faster than competitors. New models in the second half include the high-performance electric vehicle EV6 GT (domestic), the improved Telluride, the new Sportage (U.S.), and the new Niro (Europe).

Head Joo said, "The won depreciation is unlikely to be maintained at the current level, and incentives will inevitably rise to some extent. Since sales for commercial use (which have relatively lower profitability) are expected to increase, double-digit profit margins cannot be guaranteed."

A company official stated, "Strong demand for Kia vehicles continues across all models and regions, and with expected improvements in semiconductor and key component supply in the second half, production disruptions are expected to ease, so we anticipate a full-scale sales recovery."

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