Record-High First-Quarter Sales for Both Companies
U.S. Sales Rise and High Value-Added Models Gain Popularity
Expansion of Local Production for EVs and Other Models
Kia has achieved its highest-ever first-quarter sales, following Hyundai Motor Company. Although demand declined in the domestic and European markets, sales of high value-added models such as hybrids and SUVs increased, particularly in the United States, Kia's largest market.
However, starting in the second half of the year, demand is expected to contract as the impact of U.S. tariffs becomes more pronounced. Hyundai Motor Company and Kia stated that they would approach price increases cautiously, while pursuing flexible strategies such as expanding local production and adjusting incentives by model.
On April 25, Kia announced that it recorded sales of 28.0175 trillion won, operating profit of 3.0086 trillion won, ordinary profit of 3.2434 trillion won, and net profit of 2.3926 trillion won. Sales increased by 6.9% year-on-year, while operating profit decreased by 12.2%.
Kia stated, "Global sales increased year-on-year, setting a new quarterly sales record, driven by preemptive purchases in the U.S. market ahead of tariff implementation and strong sales in India and other emerging markets."
The company added, "Despite price increases driven by sales of high value-added vehicles, reduced material costs due to lower raw material prices, and positive foreign exchange effects from the weak Korean won, profitability declined slightly year-on-year. This was due to the low base effect of incentives in major overseas markets in the first quarter of last year, as well as the base effect from the full-fledged sales of the EV9 in the North American market last year, which offset the positive factors."
Kim Seungjun, Executive Vice President and Head of Finance at Kia, stated at the earnings announcement, "In response to U.S. tariffs, our basic approach will be to prioritize selling vehicles produced in the U.S. to the U.S. market. While our Georgia plant currently exports some volume to Canada, Mexico, and other regions, our primary strategy is to supply the U.S. market first."
He added, "We will respond very quickly to changes in policy or market demand, including adjusting incentives as needed."
He particularly noted, "Starting in the second quarter, with the launch of new models such as the Tasman and EV4, and the full-scale local production of the EV9 and EV6, we expect an improved product mix. Even amid ongoing tariff uncertainties, we will strive to maintain a double-digit operating margin by expanding sales in the U.S. and Europe and optimizing incentives."
However, he cautioned, "While there may be a temporary increase in demand in the second quarter due to efforts to avoid tariffs, there is also the possibility of demand slowing in the second half of the year, and we are preparing detailed strategies to address this. We intend to turn the tariff issue into an opportunity to strengthen our fundamentals and expand our market share."
He explained that the largest factor in the first-quarter operating profit decline was the impact of adjusting the production location of flagship EVs. "We shipped the EV6 and EV9 from Korea, but starting in March, we began local production in the U.S. As we reduced inventory, first-quarter sales dropped significantly. However, with production starting in March, we expect operations to normalize from the second quarter, so the adjustment should be largely resolved then," he said.
At its own earnings announcement the previous day, Hyundai Motor Company stated, "Rather than simply cutting costs, we will actively implement a contingency plan that optimizes production capacity and operating expenses based on investment priorities and efficiency. We will pursue cost reductions by improving efficiency at our existing Alabama plant and Hyundai Motor Group Metaplant America (HMGMA), and we will advance our U.S. localization strategy, including medium- to long-term parts sourcing and logistics."
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