Kia Also Announces 'Value-Up Plan'... "Targeting 35% Shareholder Return Rate and 10% Operating Profit Margin Increase"

Kia has announced a value-up program plan to enhance shareholder value, following Hyundai Motor Company. The core of the plan is to increase the total shareholder return ratio to 35% and the operating profit margin to over 10% by 2027 through strengthening sales and product competitiveness and diversifying new businesses.

On the 3rd, Kia disclosed a value-up program containing mid- to long-term strategic goals until 2027. First, it set a target to raise the operating profit margin to over 10% and maintain an average annual sales growth rate of over 10% from 2025 to 2027.

Additionally, it mentioned setting a dividend payout ratio of over 25%, a minimum dividend per share of 5,000 KRW, and increasing share repurchases up to 10% to raise the total shareholder return ratio to 35%. The total shareholder return ratio is calculated by dividing the sum of total dividends and the scale of treasury stock repurchases and cancellations by the net income attributable to controlling shareholders.

It also added that it aims to increase the return on equity (ROE) to over 15% for the next three years starting from 2025.

Regarding specific measures to increase ROE and operating profit margin, Kia emphasized expanding the lineup centered on eco-friendly vehicles and fully utilizing cost reduction measures. For hybrids, the unit price per vehicle may increase as customers choose higher specifications (ADAS and high-end trims). Furthermore, with the introduction of next-generation hybrid systems and the 'economies of scale' effect in the hybrid market, costs are expected to decrease by more than 10%.

Profitability and sales proportion plans for hybrid models listed in the Kia Value-Up Program. Provided by Kia

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For electric vehicles, Kia stated that it will focus on brand positioning in the early market stage and concentrate on increasing market share from this year, when the market gradually grows, until 2027. After 2027, when the market enters a mature phase, the plan is to transition to a business system based on SDV (Software-Defined Vehicle) to secure profitability comparable to internal combustion engines.

Moreover, Kia mentioned plans to reduce electric vehicle powertrain costs to about 45% of the 2022 level and to lower battery prices for entry-level vehicles by 10-20% through diversifying battery suppliers. It also analyzed that the introduction of next-generation electric vehicle platforms could reduce electric vehicle parts prices by 10-20% compared to current levels.

To achieve this, Kia will invest a total of 38 trillion KRW over the next five years from this year to 2028. It aims to sell 4.3 million units globally by 2030, with 1.6 million of those being electric vehicles. By region, the goal is to sell 39% (1.67 million units) in emerging markets and 61% (2.62 million units) in advanced markets.

Additionally, Kia plans to gradually increase the proportion of hybrids in global sales. The hybrid lineup will expand from the current six models to nine models by 2028, and the hybrid share of total sales will increase from 12% this year to 19% in 2028.

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