“I made more even though I sold less”… ‘This company’ is not aware of a recession. All performance numbers are ‘record-breaking’

‘13.1%’ Kia once again broke its record for the highest quarterly operating profit ratio ever. Even though car sales decreased, sales increased and profitability improved as the proportion of expensive vehicles such as recreational vehicles (RVs) sold increased and the exchange rate effect was added. It is analyzed that Hyundai Motor Company and Kia Motors have been recording good performance since the first quarter by quickly responding to market changes with hybrid vehicles despite the electric vehicle ‘chasm’ (temporary slowdown in demand).

On the 26th, Kia recorded sales of 26.2129 trillion won and operating profit of 3.4257 trillion won in the first quarter of this year. Sales increased by 10.6% and operating profit by 19.2% compared to the same period last year. All business performance numbers were ‘record-high’. Sales were the second highest ever since the second quarter of last year, and operating profit was the highest ever. The operating profit ratio also reached an all-time high of 13.1%, up 0.1 percentage points from 13% in the second quarter of last year.

The reason Kia’s management performance in the first quarter is attracting attention is because it was achieved in a situation where automobile sales volume decreased compared to the previous year. Kia sold 760,515 units in the first quarter, down 1% from the previous year due to the slowdown in the electric vehicle market.

A Kia official explained, “Despite a slight decrease in sales, sales increased mainly for expensive cars such as SUVs and eco-friendly cars. As raw material prices fell, material costs decreased, and sales in Korean Won increased due to the strong dollar, thereby increasing overall profitability.”

Kia’s operating profit ratio of 13.1% in the first quarter is noteworthy because it is significantly higher than Hyundai Motor Company’s (8.7%). Recently, Kia has been recording a higher operating profit ratio than Hyundai. Hyundai Motor Company, which announced its performance a day earlier, recorded sales of 40.6585 trillion won and operating profit of 3.5574 trillion won in the first quarter of this year. The operating profit margin is 8.7%.

The fact that Kia is more profitable than Hyundai Motors, including the performance of the luxury brand Genesis, is interpreted as the result of complex factors such as future business investment and differences in sales proportions by major region. The explanation is that the two companies within the same group invest in future businesses in proportion to their sales, and the larger Hyundai Motor Company is investing more in the hydrogen and future aviation mobility (AAM) fields. The Namyang Research Center, the core research and development center of Hyundai Motor Company and Kia Motors, is also affiliated with Hyundai Motor Company.

The fact that Kia’s sales proportion in advanced overseas markets such as the U.S. and Europe is slightly higher than that of Hyundai Motors also explains the high profit margin. Lim Eun-young, a researcher at Samsung Securities, said, “Cars sold by Kia tend to be equipped with advanced features such as driver assistance systems (ADAS),” adding, “The fact that Kia’s fixed cost ratio, such as labor costs, depreciation, and intangible asset amortization, is lower than Hyundai’s is also a factor in the difference in profit margins. “He said.

Despite the electric vehicle ‘chasm’ atmosphere, hybrid vehicles grew rapidly and led the overall sales performance of eco-friendly vehicles. Kia is pursuing a strategy to expand hybrid sales in major car models such as Sorento, Carnival, and Sportage in Korea.

Kia’s eco-friendly car sales in the first quarter increased 18.1% from the previous year to 157,000 units. Of these, 44,000 electric vehicles were sold, up 7.9% from the previous year, but hybrids grew by more than 30%, with 93,000 units sold.

In the future, Kia plans to operate a flexible production system based on demand while responding to unstable external environments such as expanding geopolitical risks, sluggish real economy, and weakening purchasing sentiment due to high interest rates and high prices.

As Kia previously proposed a goal of ‘annual operating profit of 12 trillion won’ at the beginning of this year, the company is expected to put more effort into improving profitability by utilizing high-profit models such as hybrid and electric vehicles to ‘achieve monthly operating profit of 1 trillion won.’ .