Kia’s compact sedan K4
Kia Corp., South Korea’s No. 2 carmaker, on Friday posted its highest-ever operating profit margin of 13.2% in the second quarter, more than double Tesla Inc.’s 6.3% and higher than that of other bigger rivals, including its sibling Hyundai Motor Co. and General Motors Co.
Electric and hybrid cars and sports utility vehicles, which generate higher margins than internal combustion engine cars, led the profit growth, despite a 1.6% fall in sales volume in the second quarter from the year prior.
Compared with other major carmakers that have reported second-quarter results, Kia’s profit margin is the industry’s highest.
It also marked the seventh quarter in a row of posting double-digit profit margin since the fourth quarter of 2022. In the first quarter of this year, its operating profit margin came in at 13.1%.
Operating profit margins of major carmakers
Period
Company
Operating profit margin (%)
Q2
Kia
13.2
Q2
Hyundai Motor
9.5
Q2
General Motors
8.3
Q2
Telsa
6.3
Q2
Ford Motor
5.8
Q1
Mercedes-Benz
10.8
Q1
Toyota
10.4
(Source: Kia)
In the April-June quarter, Kia sold 795,183 units, down 1.6% on-year. But its operating profits soared 7.1% to 3.64 trillion won ($2.6 billion) from the year prior, with sales up 5.0% to 27.57 trillion won.
Kia’s Q2 sales volume dropped 1.6% on-year
Total (in units)
795,183
Domestic
138,150
Overseas
657,033
(Source: Kia)
EVs and hybrids accounted for 21.4% of its global sales in the second quarter, led by the EV9, Kia’s flagship electric SUV.
Hybrids represented 11.7% of Kia’s global sales in the second quarter. Including plug-in hybrids, they made up 14.3% of its total sales in the quarter.
Particularly, hybrid variants of its popular SUVs such as the Sportage and Tucson drove the sales growth, alongside recreational vehicles.
EVs and hybrids account for 21.4% of Kia’s Q2 sales
EVs (on-year chage)
Hybrids (on-year chage)
54,000 units (up 21.8%)
89,000 units (up 7.5%)
(Source: Kia)
ON TRCK FOR 100 TRILLION WON MARK
Its first-half sales jumped 7.7% on-year to 53.78 trillion won. If its sales continue the upward trend, its revenue is expected to achieve the 100 trillion won milestone for all of this year, for the first time in its 62-year history.
Sleek deisngs of revamped models, the weakness in the Korean won and a drop in raw material prices bolstered its profits growth as well.
To shed its image as a cheap car maker, Kia in March hired former designers of German luxury carmakers BMW AG and Mercedes-Benz AG as chiefs of its respective design centers in China and Europe.
Its strong performance in the US and Europe contributed to its margin growth. North America and Europe made up 44.3% and 21.6%, respectively, of its global sales.
All-new Sorento released in August 2023
DROP IN SALES IN EUROPE, INDIA
Despite the upbeat results, a sharp decline in sales in Europe and India poses a headache for Kia. It has yet to appeal to small car drivers there.
Its overseas sales, excluding China, accounted for 48% of total sales in the first half of this year, down from 52% in 2022.
On a conference call on Friday, Joo Woo Jeong, chief financial officer of Kia, said it will make up for slowing EV sales with hybrids and internal combustion engine cars.
Kia will also actively market revamped hybrid models of SUVs such as the Sorento Hybrid and Carnival Hybrid, as well as the facelift of the compact sedan K4, he added.
The Kia Sorento SUV was the most sold passenger car in the first half of this year in South Korea.
By Jung-Eun Shin and Jin-Won Kim
newyearis@hankyung.com
Yeonhee Kim edited this article
