Kia Motors in South Korea reported a sharp decline in quarterly profits due to the growing impact of US tariffs. The company saw its operating profit drop by 24.1 percent to 2.8 trillion won. Executives cited the 25 percent US automobile tariff as the primary reason for the earnings dip. Although sales revenue grew by 6.5 percent, profit margins weakened. This marks Kia’s first single-digit margin in ten quarters.
The auto profit drop affected Kia despite strong global sales performance. Worldwide vehicle deliveries rose 2.5 percent to 814,888 units. Domestic sales increased by 3.2 percent, while North American sales climbed 4.1 percent. On the other hand, European sales dropped by 4.5 percent. India posted a 9.5 percent sales boost, helping offset regional losses.
Kia’s eco-friendly cars performed well, contributing to the overall sales gain. Hybrid and electric vehicle deliveries rose by 14 percent to 185,000 units. These models now make up 23.4 percent of Kia’s total global sales. Strong hybrid demand in the US and EV growth in Western Europe drove this increase. Kia plans to maintain momentum by promoting its popular green models.
Despite sales growth, the auto profit drop reflects rising operating costs and increased competition. In Europe, Kia raised consumer incentives to stay competitive, which further hurt margins. Executives stated that these pressures added 341 billion won in additional losses. To recover, Kia plans to adjust its market strategy. This includes reassigning 25,000 units from its Georgia plant to the US market.
To reduce the financial burden, Kia will also apply for US car parts tax credits. The automaker aims to lower the tariff impact by at least 30 percent through this combined approach. Alongside this, Kia will push US hybrid models like the Sorento, Carnival, and Telluride. It hopes to increase its US market share from 5.1 percent to 6 percent. This comes as EV demand in the US is expected to decline.
In conclusion, Kia also intends to improve its weak performance in Europe. New models like the EV4, EV5, and Sportage PE will launch later this year. These offerings target buyers facing more choices from Chinese brands. Although market conditions remain uncertain, Kia has not changed its yearly goals. The company still targets 3.2 million unit sales and revenue above 112 trillion won.
