Kia Motors Corporation today announced its first-quarter business results for 2020, reporting a 1.9 percent year-on-year decrease in quarterly global vehicle sales.
The Korean carmaker sold a total of 648,685 vehicles on a wholesale basis in the January-March period, compared with 661,355 units a year earlier. Kia says demand in Korea helped mitigate negative impact from the spread of COVID-19 in markets such as China and Europe. Sales in Korea rose 1.1% YoY to 116,739 units, while sales outside Korea slid 2.6%nt to 531,946 units.
Kia Motors recorded quarterly sales revenue of KRW 14.57 trillion, 17.1 percent higher than the KRW 12.44 trillion reported for the same period in 2019. Favorable exchange rates, improved product mix as well as strong performance of key models such as Telluride and Seltos SUVs contributed to higher revenue.
Operating profit in the first quarter dropped 25.2 percent year-on-year to KRW 444.5 billion, compared with KRW 594.1 billion a year earlier, during which time a one-off item helped boost profits.
Quarterly net profit (including minority interests) declined 59 percent from the same period in 2019 to KRW 266 billion as earnings contributions from affiliated companies contracted while the end-quarter fluctuation in KRW/USD exchange rate also adversely impacted on the net profit.
The company anticipates that it is likely to face weakening profitability from the second quarter as the global spread of COVID-19 would take full effect to its business environment around the world, leading to greater uncertainty to the global economy and consumer demand in automobiles. Suspension in production facilities and halts to some dealership operations would adversely affect vehicle supplies, too.
To flexibly cope with the uncertain business environment, Kia Motors plans to enhance its product competitiveness with new model line-up. The company will focus its efforts on sales of SUVs, notably Telluride, Seltos and recently launched all-new Sorento. Kia will introduce customer-centric marketing and promotion activities tailored to each market, reflecting shifting customer needs in the era of pandemic. The company also plans to introduce an all-new compact SUV to the Indian market in the third quarter to further boost sales momentum.
Despite the tough business environment, Kia Motors says it will continue to focus on realising its mid- to long-term strategy of ‘Plan S’, under which Kia aims to proactively introduce 11 battery electric models and increase operating profit margin to 6 percent by 2025.