Kia posts record quarterly sales and revenue, but operating profit slips

Sales hit 33 trillion won, operating profit 2.6 trillion won

Global sales reach 850,000 units, up 4.5% on year

High fuel prices drive region-by-region powertrain strategy

HEV and EV sales climb

Kia announced Friday that it achieved record quarterly sales volume and revenue in the second quarter, even as global uncertainty — including the war in the Middle East — weighed on the broader market. The automaker credited its electrification model lineup and timely new-vehicle launches for driving the gains.

Second-quarter wholesale sales reached 851,639 units, while revenue rose 12.6 percent year-on-year to 33.04 trillion won ($22.5 billion), both all-time quarterly highs. Sales volume was up 4.5 percent from the same period last year.

Operating profit fell 4.9 percent year-on-year to 2.63 trillion won. Pre-tax profit came in at 3.07 trillion won and net profit for the period at 2.33 trillion won.

New model launches offset shrinking industry demand; global market share rises to 4%

Global industry demand contracted 3.8 percent, weighed down by geopolitical instability in the Middle East and weakening consumer sentiment in China. Kia said it countered those headwinds by proactively building out its electrification model lineup, responding swiftly to shifting regional demand amid high fuel prices, and launching new vehicles at the right time.

Domestic sales in the second quarter totaled 154,816 units, accounting for 18.2 percent of total sales, while overseas sales reached 696,823 units, or 81.8 percent.

Global retail sales reached 839,000 units, up 5.8 percent from the second quarter of last year.

Domestic retail sales rose 8.6 percent year-on-year to 154,000 units, driven by growing demand for electric vehicles including the EV3, EV5 and PV5.

In the United States, sales climbed 2.8 percent to 224,000 units, buoyed by the new Telluride's launch effect and strong performance from key SUV models including the Sportage and Sorento — all of which are available in hybrid variants.

Western Europe posted a 12.9 percent increase to 151,000 units, lifted by the launch effect of the EV2, which went on sale in the first quarter of this year, and the EV4, EV5 and PV5, which began full-scale sales in the fourth quarter of last year.

Strong performance across major markets pushed Kia's global market share to 4 percent in the second quarter, up from 3.7 percent a year earlier. On a first-half basis, the 4 percent share is the highest in the company's history — rising to 5 percent when China is excluded.

HEV and EV gains lift average selling price and revenue; incentives weigh on operating margin

Kia said growing hybrid and electric vehicle sales in advanced markets such as the United States and Europe improved its average selling price, which in turn drove the revenue increase.

However, the company deployed aggressive pricing and incentive policies in South Korea and Western Europe to compete with Chinese EV brands, and a weaker won raised warranty provisions in won terms, pushing operating profit below year-earlier levels.

The operating profit margin fell 1.4 percentage points year-on-year to 8 percent, though it has risen for three consecutive quarters since hitting a trough of 5.1 percent in the third quarter of last year — immediately after US tariffs took effect — and is approaching pre-tariff profitability levels.

The cost of sales ratio rose 1.7 percentage points year-on-year to 81.7 percent, as higher incentives and the impact of US tariffs offset favorable exchange-rate conditions and the improved average selling price. Excluding the tariff effect, the cost of sales ratio would have been 79.2 percent, below the 80 percent threshold. The selling, general and administrative expense ratio improved 0.3 percentage points year-on-year to 10.3 percent.

EVs for Korea and Western Europe, HEVs for the US — a region-by-region optimization strategy

A key driver behind Kia's record quarterly sales was the surge in electrified vehicle (xEV) sales. Retail sales of xEVs reached 296,000 units in the second quarter, up 60 percent year-on-year. The xEV share of total retail sales rose 11.9 percentage points to 35.3 percent over the same period.

Kia attributed the results to its timely execution of a region-specific powertrain optimization strategy amid high global fuel prices — capitalizing on rising EV demand in South Korea and Western Europe while meeting growing hybrid demand in the United States.

EV sales jumped 88.4 percent year-on-year to 110,000 units, driven by the launch effect of mass-market EV models — the EV2, EV4 and EV5 — as well as strong sales of the PV5, the company's first purpose-built vehicle model.

In South Korea, second-quarter EV sales reached 38,000 units, up 123.4 percent from the same period last year. EVs accounted for 24.5 percent of total domestic sales, more than double the 11.9 percent share recorded in the second quarter of last year. Western Europe also saw EV sales rise 101.5 percent year-on-year to 52,000 units.

Hybrid sales rose 61 percent year-on-year to 178,000 units, supported by the launch effect of new models including the Telluride Hybrid and Seltos Hybrid, alongside continued strong sales of established hybrid volume models such as the Sportage, Sorento and Carnival.

The hybrid surge was especially pronounced in the United States, where HEV sales reached 66,000 units in the second quarter — a 151.6 percent increase. Hybrids accounted for 29.6 percent of total US sales, approaching the 30 percent mark.

Record annual EV sales targeted; new-model momentum to continue in Europe and the US

Kia said it expects to maintain solid earnings in the second half of this year and meet its full-year guidance, citing sufficient new-model competitiveness and demand for EVs and hybrids that it expects to persist for now. In Europe, the new-model launch effect is expected to continue, and a partial recovery in Middle East demand should also support year-on-year sales growth.

In South Korea, Kia plans to expand sales of mass-market EV models such as the EV3 and EV5, along with the PV5, and aims to defend its top EV market share position despite intensifying competition from foreign brands. The company is also targeting record annual EV sales for the full year.

In the United States, Kia will expand annual production capacity for its flagship SUV, the Telluride — including the hybrid variant — to further improve profitability. The Sportage Hybrid, the first Kia model to be mass-produced at Hyundai Motor Group Metaplant America, will begin customer deliveries in the second half. Kia also plans to launch the Mexico-built EV3 in the US market in the second half of this year.

In Europe, Kia will locally produce the EV2 and EV4 to maximize price competitiveness for its mass-market EV lineup, and will use the PV5 to strengthen its brand presence in the light commercial vehicle segment. The Seltos Hybrid and K4 Hybrid will also launch locally. In emerging markets including India and Latin America, the company will continue to introduce locally tailored strategic models and expand supply.

Jeong Seong-guk, Kia's executive vice president for investor relations and strategic investment, said the company would "continue to maintain solid earnings power through improvements in our sales mix centered on high-value-added vehicles and cost-reduction efforts on multiple fronts."

eyre@heraldcorp.com