Kia was not able to avoid the impact of President Donald Trump's tariff bomb. Although it recorded the highest quarterly sales ever in the second quarter of this year, its operating profit decreased by more than 20%. The high tariff of 25% on automobiles is expected to be fully reflected in the performance starting in the second half of the year, and Kia has set a policy to prioritize supplying production volumes to the U.S. and redirecting shipments that were to be exported from Korea to Canada or Mexico to minimize the deterioration of its performance.
◇Operating profit records 2.7 trillion won… sales are the highest ever
Kia announced on the 25th that it recorded sales of 29.3496 trillion won and operating profit of 2.7648 trillion won in the second quarter of this year. Sales increased by 6.5% compared to the same period last year, marking the highest quarterly sales ever. Operating profit decreased by 24.1%, a larger decline than Hyundai Motor Company's operating profit reduction of 15.8%. This is interpreted as a base effect from the maximum operating profit Kia recorded a year ago. Kia's sales for the first half of this year totaled 57.367 trillion won, with operating profit of 773 billion won.
Kia, like Hyundai Motor Company, saw a retreat in operating profit despite sales growth due to the 25% automobile tariff from the Trump administration. As a result, it suffered a loss of 786 billion won, but its operating profit margin stood at 9.4%. A Kia official noted, "Including the second quarter, we maintained a high operating profit margin of 10.1% in the first half of the year, and if there were no external factors like tariffs, we believe we could have maintained a much better profitability. This has shown the differentiated fundamentals."
Car sales increased in all regions except Europe. In the second quarter of this year, Kia sold 814,888 units globally, a 2.5% increase from a year ago. The increase in sales was attributed to rising global demand for hybrid electric vehicles (HEVs) and the effects of new product launches. In Korea, sales of the pickup truck Tazman and the EV4 increased, while in the U.S., the K4 saw increased sales, and in India, the sales surged due to the Shiroos effect. Global eco-friendly vehicle sales in the second quarter also increased by 14%.
◇"American production, prioritized supply to the U.S.… will turn tariffs into an opportunity"
Kia has revised its strategy to prioritize the supply of U.S. production volumes to the U.S. Initially, it planned to send some of the production volumes from the Hyundai Motor Group's Meta Plant America (HMGHA) in Georgia, but this has been changed. Additionally, the volume exported from Korea to the U.S. will also be converted to supply regions like Canada to minimize the impact of U.S. government tariffs. Kim Seung-jun, the Deputy Minister of Kia's finance department, stated, "If electric vehicle sales stall, we will minimize the impact through models like the Sportage."
Kia has set a strategy to increase its HEV lineup in the U.S. due to anticipated uncertainties arising from tariffs. Some Japanese companies are raising prices or keeping incentives low, and Kia intends to use this situation as an opportunity to "level up." It plans to increase sales volume by about 7% in the U.S. market during the second half of the year through the high-demand Carnival HEV, aiming to raise its market share to the 6% range. As of the first half of this year, Kia's market share in the U.S. was 5.2%.
It is anticipated that new car demand will intensify in Europe. In particular, Kia is set to unveil a new model of the Sportage in the European market this August. The share of HEVs in Kia's European sales is high at 23.9% (111,000 units). The Deputy Minister stated, "The share of Kia's Sportage in Europe is quite significant," and "there continues to be a favorable response to the EV3 in Europe, and with the launch of the EV4, we will also be adding EV5 and EV models." In India, the locally strategic electric vehicle Carens Clavis EV will be launched this month, and plans are in place to expand the dealer network to solidify a sales system of 300,000 units.
Kia was tight-lipped about its annual growth targets due to the unfinished tariff negotiations between Korea and the U.S. The Deputy Minister stated, "It has not yet been determined whether Korea will reach a tariff level of 15% like Japan or reduce to 10% like the U.K.," asserting that "the situation is highly variable regarding pricing policies, and we will announce the guidance after the tariff policy is finalized."