Kia announces 2023 first quarter business results

  • 2023 first quarter global sales of 768,251 units, a 12% increase Y/y

⋯ 1Q revenue increased 29.1% to KRW 23.69 trillion
⋯ Operating profit increased 78.9% to KRW 2.87 trillion
⋯ Operating profit margin of 12.1%, versus 8.8% for 2022 1Q
⋯ Highest quarterly results, a new record for two consecutive quarters

  • Increase of sales, product mix improvement and average selling price (ASP) increase, as well as favorable exchange rates, lead to significant increase in revenue and profitability
  • Expansion of sales of HEV and PHEV models, eco-friendly vehicles recording total sales of 133,000 units, a 21.1% increase Y/y
  • Kia to continue its sales of higher-margin models and profitability expansion based on strong brand power and the successful launch of the new EV9

Kia Corporation announced its 2023 first-quarter business results.

For the first quarter of 2023, Kia recorded global sales of 768,251 units, a 12 percent increase year over year. The company posted quarterly revenue of KRW 23.69 trillion with an operating profit of KRW 2.87 trillion, an increase of 29.1 percent and 78.9 percent respectively. The company also recorded a net profit of KRW 2.12 trillion, including non-controlling interest, an increase of 105.3% compared to the same period last year.

Profitability indicators such as revenue and operating profit reached a record high on a quarterly basis, breaking the record for the second consecutive quarter following the fourth quarter of 2022. The company also recorded an operating profit margin of 12.1%, one of the highest levels among global automotive OEMs.

With solid demand maintained, the sales increased due to stabilization of production and expansion of available inventory as well as the profit structure being improved due to increased levels of higher-margin vehicle sales, lower incentives as well as favorable exchange rates.

Regarding the outlook for the first half of 2023, although uncertainties such as the trend of high interest rates, inflation, and geopolitical tensions remain considerable, Kia will continue to expand its profits due to strong sales delivered by the peak sales season, continued strong demand, improved sales mix centered on higher-margin SUVs, and the successful launch of the company’s flagship electric SUV EV9.

Kia’s 1Q business results

In the first quarter of 2023, Kia reported global sales of 768,251 units, a 12 percent increase from a year earlier. Sales outside of Korea stood at 626,511 units, a 11.1 percent increase year over year, with sales in Korea at 141,740 units, a 16.5 percent increase.

Sales outside of Korea achieved double-digit growth in major markets with a virtuous cycle of increased available inventory due to improved supply leading to increased sales. Especially strong sales centered on the company’s key RV models in the U.S. market, increased volume due to the conversion to three shifts in Indian plants, and the release of new models, including the Sportage SUV and Carens, a strategic model for the Indian market.

Sales in Korea stemmed from the improvements of parts supply, which have strengthened vehicle production leading to strong sales of the company’s high-demand RV models, including the Carnival minivan, Sportage and Sorento SUV. Also, the two-digit increase stemmed from the base effect of the previous year, which was affected by the semiconductor shortage issue.

The company also reported a first quarter revenue of KRW 23.69 trillion, attributed to increased sales volume due to stabilized production, continued increase in sales prices per unit, and favorable exchange rates.

Operating profit in the first quarter rose 78.9 percent to KRW 2.87 trillion due to increased sales, enhanced sales mix and price centered on high-end and high-priced models such as higher-margin RV models, and reduced sales incentives based on the company’s strong marketability and enhanced brand perception. The operating profit margin also recorded 12.1 percent, versus 8.8 percent from the same period last year.

Strong sales of electrified models

In the first quarter of 2023, Kia recorded retail sales of 133,000 electrified vehicles, which include hybrid, plug-in hybrid, and all-electric models. This represents a 21.1 percent increase from a year earlier as well as a 2.3 percent point increase to 18.1 percent of the electrified model sales out of the company’s total sales.

Electrified models have been a major driving force in Kia’s vehicle sales. In Western European countries, the sales proportion of electrified models accounted for 36 percent of quarterly vehicle sales, 32 percent and 14 percent for Korea and the U.S. respectively.

Efforts to further expand Kia’s electric vehicle sales across markets have helped to improve the sales of electric vehicles in more regions. While Western Europe and the U.S. accounted for a combined 74.7 percent of all electric vehicle sales in the first quarter of last year, that dependence has now declined to 59 percent in the first quarter of this year, with Western Europe and the U.S. accounting for 44.1 percent and 14.9 percent respectively. The contribution from other regions increased, with Korea accounting for 34.3 percent and emerging markets 6.7 percent.

Future outlook

Kia anticipates market uncertainties, including fluctuation in raw material prices and inflation, to persist in 2023. However, the company aims to further bolster its initiatives to continue the positive business cycle.

As the second quarter represents the peak period of the annual automotive sales cycle, Kia will quickly maximize production and sales to respond to high global customer demands and further enhance sales of electrified models and higher-margin SUV models to strengthen profitability.

Kia will build on EV sales momentum through the launch of the EV9, Kia’s all-electric large SUV, in Korea in the first half of 2023, followed by other markets, including Europe and the U.S. In addition, Kia will strengthen its position as a leading EV brand through its EV products, which have been globally recognized through numerous accolades such as the ‘North American Car of the Year’ and ‘European Car of the Year’.

With the EV9, Kia will provide an unparalleled EV experience that aims to revolutionize the EV market with its strikingly contemporary exterior and interior design, over-the-air (OTA) update services and level three autonomous driving capabilities.

For the U.S. market, which is playing a major role in leading Kia’s sales and profitability, Kia will expand the production volume of the popular Telluride SUV, while further strengthening the sales of higher-margin models, focusing on its flagship SUVs which have become popular models across multiple segments.

In Europe and India, Kia will also focus on expanding sales of its higher-margin SUV models, such as the Sportage and Seltos SUV, while also expanding the sales of its electric vehicles by sequentially introducing key models, such as the EV6 GT, EV6, and EV5, a strategic model for China, to each market.

While competition for promotion among global automotive companies is expected to increase with the commencement of the peak sales season in the second quarter, Kia plans to further maximize profitability through differentiated incentives and price policies based on increased marketability confidence and target returns.