Kia achieves record Q1 sales, but hindered by US tariffs…defends performance with eco-friendly vehicles

Kia achieves record Q1 sales, but hindered by US tariffs…defends performance with eco-friendly vehicles

Hyundai Motor and Kia hit by 1.6 trillion won in combined tariffs…sales up in all markets except Middle East

Kia, the second-largest finished vehicle manufacturer in Korea, reported significantly lower performance than the same period last year, despite achieving its highest quarterly sales, due to the impact of US auto tariffs and the Middle East war.

Instead, Kia maximized its efforts to offset the deteriorating performance by boosting sales of high-profit eco-friendly vehicles, including electric vehicles (EVs) and hybrids (HEVs), in Q1 this year, forecasting a rebound after Q2.

Kia announced on the 24th that its consolidated operating profit for Q1 was tentatively tallied at 2.2051 trillion won, a 26.7% decrease from the same period last year.

Operating profit decreased by 803.5 billion won compared to Q1 last year (3.0086 trillion won), and the operating profit margin dropped by 3.2 percentage points to 7.5%. Net profit decreased by 23.5% to 1.8302 trillion won.

Sales increased by 5.3% compared to the previous year, reaching 29.5019 trillion won, surpassing the previous record (29.3496 trillion won in Q2 last year) to set an all-time quarterly high. However, profitability significantly worsened due to US tariffs imposed from April last year, increased incentives due to intensified competition, and the impact of a high exchange rate.

Nevertheless, Kia recorded its highest Q1 sales performance, selling 779,741 units (wholesale basis), a 0.9% increase year-on-year. It is evaluated that Kia better defended against the decrease in demand caused by global economic slowdowns and wars compared to other brands.

The combined operating profit with its sibling company Hyundai Motor (operating profit of 2.5147 trillion won, 30.8%↓), which announced its results the day before Kia, recorded 4.7198 trillion won. This is a 28.9% decrease compared to the combined operating profit of Q1 last year (6.6422 trillion won). The operating profit gap between Hyundai Motor and Kia in Q1 decreased by about half, from 625 billion won last year to 309.6 billion won this year.

Looking at the details of Kia's Q1 operating profit this year, US tariff costs accounted for most of the decrease, at 755 billion won. When combined with Hyundai Motor's tariff costs (860 billion won), both companies bore an additional 1.615 trillion won in tariff costs in Q1 alone.

Kia defended its performance by expanding sales of high-profit vehicle types, such as electric vehicles and hybrid vehicles, which generate significant profits even with lower sales volumes compared to other vehicle types.

Q1 eco-friendly vehicle sales increased by 33.1% year-on-year to 232,000 units, and their share of total sales rose by 6.6 percentage points to 29.7% (17.6% for hybrids, 11% for EVs, etc.). EV sales increased by 54.1% to 86,000 units, and hybrid sales increased by 32.1% to 138,000 units. In particular, eco-friendly vehicles gained more popularity than internal combustion engine vehicles in the domestic and Western European markets, with their shares rising to 59.3% (up 16.6 percentage points) and 52.4% (up 8.5 percentage points), respectively.

Globally, all markets showed growth except for the Africa and Middle East markets, which were directly affected by the war. Regional sales (wholesale basis) increased by 5.3% in Korea to 142,000 units and by 4.1% in the US to 207,000 units. Especially in the US market, hybrid vehicle sales surged by 73.5% year-on-year to 40,000 units, driven by the new Telluride effect.

Good performance was also recorded in Western Europe with 140,000 units (up 1.2%), India with 84,000 units (up 11.6%), Central and South America with 39,000 units (up 22.1%), and China with 19,000 units (up 6.5%). Only the Africa and Middle East markets saw a decrease in sales to 51,000 units (down 15.6%).

Kim Seung-jun, Head of Kia's Finance Division, stated in a conference call today, "Risks such as the Middle East war and rising raw material costs will continue after Q2, but we believe there is sufficient capacity to compensate for this in other regions such as Korea and Europe." He added, "We can maintain our annual targets of 3.35 million unit sales and 10.2 trillion won in operating profit."