April 26, 2024

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[THE INVESTOR] Kia Motors on April 27 said its sales in China slumped 35 percent in the first quarter, dragged down by a dealership dispute, as well as heightened political tension between Seoul and Beijing over the deployment of US-led THAAD missile system. 

“The Chinese market in the first quarter was difficult due to Kia’s conflict with local dealers and the ongoing political issue that dropped consumer demand,” Han Chun-soo, Kia’s chief financial officer, said during a conference call after the automaker’s first-quarter earnings report. 

“We will improve productivity and reduce cost to minimize the loss, while releasing new China-specific cars and work on strengthening the dealership network.”

Kia said it will focus on marketing its new car KX7 SUV, China-only midsized SUV based on the third generation Kia Sorento, that was unveiled in March. The automaker plans to launch two new cars that were unveiled at the Shanghai Auto Show, the K2 Cross and Pegas compact sedan, in June and August, respectively, to recoup sales in the world’s largest auto market. 

Kia sold 89,000 units in the first three months ending March 31 in China, down 35.6 percent from a year earlier. 

The unprecedented sales decline came amid intensifying anti-Korean sentiment after the Korean government decided to deploy THAAD. Beijing remains opposed to the missile system, calling it a risk to its security. 

During a conference call on April 27, Kia said its first-quarter operating profit slumped 39.6 percent to 382.8 billion won on-year, hit by lower sales in its major markets China and the US. 

Net profit dropped 19 percent to 765.4 billion won during the cited period, while sales gained 1.5 percent to 12.84 trillion won. 

In total, Kia sold 658,332 units in Korea and overseas during the January-March period, down 6.5 percent. 

By Ahn Sung-mi (sahn@heraldcorp.com)