Kia Profit Falls as U.S. Tariffs and Incentives Rise; Hybrid and PBV Push Planned

Kia posted its highest-ever quarterly revenue but saw profitability slide as external costs piled up, including more than 700 billion won in U.S. tariff-related expenses. The automaker said it will lean more heavily on hybrids and expand into purpose-built vehicles to seek a rebound.

Kia said in a regulatory filing on Thursday that first-quarter revenue rose 5.3% from a year earlier to 29.5019 trillion won, a record for any quarter. Operating profit fell 26.7% to 2.2051 trillion won.

The profit decline came despite higher sales as the impact of U.S. tariffs took hold and other factors added pressure, including higher incentives amid tougher competition in North America and Europe and an increase in foreign-currency warranty provisions tied to a late-quarter rise in the won-dollar exchange rate. Kia said its first-quarter U.S. tariff cost totaled 755 billion won.
 
Kia said profitability worsened due to "external factors," including the full impact of U.S. tariffs on imported finished vehicles and higher incentives driven by intensified competition in North America and Europe. It added that it maintained "solid fundamentals" by improving its mix toward higher-margin models and lifting average selling prices, helping it achieve record revenue.
 
Kim Seung-jun, Kia’s head of finance, said on an earnings conference call that oil prices could remain around $100 this year even if the war ends, posing a clear cost risk. Still, he said Kia ships about 260,000 vehicles a year to the Asia-Middle East region and believes it has enough capacity to make up the difference in other regions such as the domestic market, Europe and India.
 
Looking ahead, Kia said it will strengthen its electrification strategy centered on higher-value hybrids. It plans to roll out models including the Telluride HEV and Seltos HEV this year, followed by the K4 HEV, aiming to meet demand for eco-friendly vehicles. Kia set a 2026 target of 690,000 hybrid sales and said it will secure an additional 400,000 units of production capacity over the mid-to-long term while reinforcing its global production system.
 
Kia also plans to expand into purpose-built vehicles, or PBVs. It said it launched its first PBV model, the PV5, last year and sold about 8,500 units by year-end. For this year, it aims to sell 54,000 units as it begins a full global rollout. The PV5 base model and conversion models will be introduced sequentially in Europe, Asia-Pacific and the Asia-Middle East markets this year.
 
Kim said Kia expects demand in India, Latin America and the Asia-Pacific region to grow by more than 10% in the second quarter. He said Kia plans to raise production this year by 5% at its plants in South Korea and by more than 10% at its China plant, which he described as key facilities for meeting emerging-market demand.