Kia "IRA, Considering Utilization of Existing Factories as Well as New Plant Establishment"

"Review and share from various aspects such as vehicle type and brand"
"SUV sales may increase further... Incentives can be adjusted next year as well"

[Asia Economy Reporter Yoo Hyun-seok] Kia announced that it is considering various approaches, including building new factories and recycling existing ones, to respond to the Inflation Reduction Act (IRA).

Joo Woo-jung, Vice President and Head of Kia's Finance Division, said during the Q3 earnings conference call on the 25th, "We are examining various ways to utilize not only new factories but also existing ones," adding, "After reviewing multiple vehicle models from profitability and brand perspectives, we plan to share the answers."

Vice President Joo explained, "Regarding the IRA, it is a part where the government is approaching jointly at the policy level," and added, "We are cautiously approaching production and battery supply separately."

Kia's sales of eco-friendly vehicles are rapidly increasing. As of Q3 this year, sales of Battery Electric Vehicles (BEVs) reached 40,000 units, a 34.3% increase compared to the same period last year. In particular, in the United States, the share increased by 1.5 percentage points from 1.7% in Q3 last year to 3.2% in Q3 this year. The proportion of North America, specifically the U.S., in total BEV sales also rose from 9.9% in Q3 last year to 14.6% in Q3 this year.

Additionally, Kia expects sales of Sports Utility Vehicles (SUVs), which contribute to profitability enhancement, to expand further. Jung Sung-guk, Executive Director in charge of Investor Relations, explained, "When the initial SUV sales share reached 25%, there was talk that it was the maximum," adding, "Whether in Western Europe or North America, there still seems to be room for SUV sales share to increase."

Along with this, incentive costs are expected to be effectively controlled. Vice President Joo Woo-jung said, "We fundamentally assume that incentive costs will rise to some extent due to interest rate hikes," and explained, "We view positively whether we can cover the incentive burden caused by market contraction through volume increase and other efficiency improvements, so we expect Q3 earnings excluding one-time quality costs and Q4 trends to continue as they are." He added, "Since we have strengths in the SUV sector, the elasticity of incentives is not expected to be high next year either."

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