South Korea’s second-largest automaker Kia Corp. saw its Chinese operations turn profitable in 2024 for the first time in eight years as sluggish sales in China were offset by brisk exports from there.
According to Korea’s financial watchdog, the Financial Supervisory Service, Kia’s Chinese business posted 50.6 billion won ($35 million) in operating profit last year, swinging from a loss of 374 billion won in the previous year.
Kia, the sister firm of Hyundai Motor Co., sold 220,170 vehicles in China in 2024, up 52.9% from 144,002 units in 2023. With that figure, Kia posted the biggest sales growth rate last year among foreign automakers operating in China through a joint venture scheme.
HIT BY THAAD ROW
Kia entered the Chinese market in 2003, building a factory with an annual production capacity of 400,000 units in Yancheng, Jiangsu Province. The automaker expanded its Yancheng plant output capacity to 890,000 units later.
At its peak in 2016, Kia sold 650,000 vehicles in China, generating 414.8 billion won in operating profit on sales of 9.8 trillion won.
The Hyundai Motor Group affiliate, however, suffered a sharp sales decline in China following Korea’s deployment of the THAAD, or US terminal high altitude area defense, missile defense system, which led to widespread anti-Korean sentiment in China.
In 2017, its China sales plummeted to about 360,000 units, with its sales halved to 4.77 trillion won. It also swung to an operating loss of 273 billion won.
Kia has since posted losses for seven straight years.
CHINA: KIA’S EXPORT BASE
Analysts said Kia’s return to profitability in China was thanks to its business strategy of turning its Chinese operations into an export base targeting emerging markets, including Southeast Asia, the Middle East, and Latin America.
While sales in China struggled, Kia said its aggressive push into those emerging markets has fueled the turnaround.
Recognizing the need for a strategic shift, Kia repositioned its Chinese operations as an export hub in 2023.
The Korean automaker began exporting the compact sedan Pegas and small sport utility vehicle Sonet, previously sold within China, to countries such as Australia, New Zealand and Thailand.
The strategic pivot paid off.
Kia exported 140,724 vehicles from its Chinese plant in 2024, a fourfold increase from two years ago.
The company also expanded its reach to other key regions, exporting 54,117 vehicles to the Middle East and 44,680 units to Latin America that year.
This year, Kia aims to sell 180,000 units in overseas markets overall, with its export markets expanding to over 80 from 76.
CHALLENGES PERSIST IN CHINA
Despite its success on its export front, Kia continues to grapple with sluggish sales within China.
Its 2024 vehicle sales in China stood at 79,446 units, down 5.3% from the previous year’s 83,875 units.
To regain momentum in China, Kia is betting on popular models such as the compact SUV KX3, known as the Seltos in some other markets, and the electric EV5.
The KX3 is Kia’s best-selling model in China with 15,094 units sold last year.
The EV5, equipped with cost-effective lithium iron phosphate (LFP) batteries, posted 5,705-unit sales in China last year.
Analysts said while Kia’s Chinese business has made impressive strides with its export-driven recovery, sustainable profitability will depend on further diversifying its overseas markets and navigating China’s increasingly competitive automotive landscape.
By Bo-Hyung Kim
kph21c@hankyung.com
In-Soo Nam edited this article.
