Kia Corp. shares fell 12% in Seoul to their lowest level since June 2025 after the carmaker warned that earnings are being eroded by mounting costs linked to the Middle East conflict. The war is driving up expenses for raw materials including fuel, aluminum and copper, shaving around 600 billion won ($450 million) off Kia's third-quarter operating profit, which came in at 1.82 trillion won, well below analyst expectations. "The fallout from the war goes beyond the Middle East," Chief Financial Officer Seung-Jun Kim said during an earnings call. "Logistics expenses have also escalated significantly, and we expect this situation to persist into the fourth quarter." Kia's stock is down more than a fifth this year. The worse-than-expected results underscore the challenges automakers face as they deal with high costs and mounting competition, driven mainly by Chinese brands such as BYD Co. expanding abroad.
Kia's bigger affiliate Hyundai Motor Co. cut its sales target and investment budget for this year on Thursday even as it reported robust third-quarter earnings. Other factors driving the miss include a strengthening won and higher spending on vehicle incentives, said Korea Investment & Securities Co. analyst Changho Kim. The earnings miss overshadowed strong growth in almost all markets excluding China and Southeast Asia, driven in part by its broad offering of hybrid and fully electric models.
Sales of its hybrids more than doubled in the US, raising the company's overall market share there to 5.8% in the period. Total global retail sales of electrified models soared 47%, making up more than a third of Kia's volume. Kia said it plans to maintain its high incentive policy in Europe and elsewhere at least until next year, adding that it will step up internal cost-cutting measures to offset the damage.
It expects its EVs to reach price parity with gasoline models in the 2027-2028 period.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing