Kia's Q3 profit jumps 24.3% on hybrid, SUV sales growth
Kia headquarters in Seoul / Yonhap
Electrification strategy helps drive growth despite weaker global auto demand
Kia has achieved solid earnings growth in the third quarter, supported by rising sales of hybrids, electric vehicles (EVs) and popular SUV models across major markets, the carmaker said Friday in a regulatory filing.
The carmaker said its operating profit between July and September jumped 24.3 percent to 1.82 trillion won ($1.36 billion). Sales also increased 10.2 percent to 31.6 percent during the same period.
The automaker's earnings growth was driven by its diversified electrification strategy, as it helped sustain growth despite weakening global auto demand, Kia said.
Global vehicle sales rose 7.9 percent to 847,355 vehicles in the third quarter on balanced sales growth of its hybrids, EVs and SUV models.
Kia's SUV lineup, including the Sportage, Carnival and newly introduced Telluride Hybrid, helped drive sales in the United States, where retail sales rose 7.8 percent to approximately 234,000 units. The automaker's U.S. market share reached a quarterly record of 5.8 percent.
Hybrid sales in the U.S. surged 118 percent to 69,000 vehicles, significantly outpacing the market's 27 percent growth. The launch of the Telluride Hybrid and local production of the Sportage Hybrid contributed to the increase. Kia's share of the U.S. hybrid market reached 10.6 percent, marking its first double-digit quarterly share since entering the segment in 2011.
From left are Kia's Carnival minivan, Sportage SUV and Sorento SUV / Courtesy of Kia
In Western Europe, Kia's sales increased 16.9 percent to 145,000 vehicles, supported by demand for its expanded EV lineup. The automaker sold approximately 63,000 EVs in the region, accounting for 43.2 percent of its total sales there, more than double the 19.2 percent recorded a year earlier.
Sales in India — another major overseas market for Kia along with the U.S. and Europe — also rose 38.5 percent to 89,000 units, driven by the new Seltos compact SUV launched earlier this year and the impact of newly unveiled models, including the Sorento and Syros EV. Kia also climbed one spot to fifth in the local market in terms of sales ranking from the previous quarter.
However, external pressures continued to weigh on profitability. Rising raw material costs and prolonged conflict in the Middle East reduced operating profit by approximately 570 billion won compared with a year earlier. Increased sales incentives and price adjustments, particularly in Europe and Korea, also weighed on earnings.
Meanwhile, the adjustment of U.S. automotive tariffs from 25 percent to 15 percent, higher sales volumes and favorable foreign exchange movements supported operating profit growth in the third quarter.
Kia plans to expand sales of high-margin hybrid models in Korea and the U.S. in the fourth quarter, and focus on strengthening its EV lineup in Europe.
Kim Seung-jun, head of Kia's finance and accounting division, struck a cautious tone on the fourth-quarter outlook.
“It will be difficult to achieve a dramatic turnaround in profitability in the fourth quarter as well," Kim told investors during a conference call. "The key variable is the war in the Middle East, and it is difficult to make a firm assessment as the conflict could also come to an end.”