Kia has announced its global automotive market response strategy and its mid-long term business strategy focused on electrification for 2030.
On the 5th, Kia held the ‘2024 CEO Investor Day’ at the Conrad Hotel in Yeouido, where they unveiled risk response measures and mid-long term business strategies aimed at transitioning to a ‘sustainable mobility solutions company’ to investors and analysts.
Since revealing its proactive electric vehicle (EV) business framework in 2020, which emphasized personalized mobility solutions, Kia has held annual CEO Investor Days to share its future vision and actively communicate with market stakeholders like investors.
The presentation on this day focused on reinforcing the business strategy in response to recent changes in the global automotive industry landscape, based on the innovative results achieved over the past four years during unprecedented crises, and aimed to detail the ‘Kia 2030 Strategy’ announced last year.
Kia President Song Ho-sung stated, “Since the ‘brand relaunch’ in 2021, Kia has been making various changes across its business, including building a groundbreaking electric vehicle lineup and presenting a customer-centered future in mobility,” adding, “By effectively responding to changes in the automotive market and executing the detailed mid-long term strategy, we aim to become a brand that contributes to customers, communities, and the global society and environment.”
Kia aimed to continue adapting flexibly to changes in the market while actively responding to growing risks amidst intensifying competition and escalating geopolitical challenges.
To achieve this, Kia outlined several strategies: ▲ Mitigating the impact of slowing EV demand by strengthening its hybrid electric vehicle (HEV) lineup and introducing mass-market EV models ▲ Responding to the global expansion of Chinese brands by enhancing product competitiveness and creating new demand through PBV and Chinese factories ▲ Overcoming deteriorating external business conditions through flexible production operations.
Kia anticipates a slowdown in the growth of the electric vehicle market from this year through 2026 due to sluggish real economy, reduced EV subsidies, and insufficient charging infrastructure.
In response to the deceleration in EV market demand, Kia plans to reinforce its HEV model lineup.
Kia plans to operate HEV models across most major types, including the recently launched Carnival HEV, with plans for six models in 2024, eight in 2026, and nine by 2028.
Through this, hybrid vehicle sales are expected to increase from 372,000 units (12% of sales) in 2024 to 800,000 units (19%) by 2028.
The company will continually target the electric vehicle market, launching mass-market models such as EV3, followed by EV2, EV4, and EV5 across key markets including Korea, North America, and Europe.
In emerging markets like India, Kia plans to release two locally specialized models, including the Carens EV.
The expected sales for mass-market EV models are projected to be ▲ 131,000 units in 2024 (43% of sales) ▲ 263,000 in 2025 (55%) ▲ and 587,000 in 2026, targeting 66% of total electric vehicle sales.
Kia also plans to respond flexibly to changes in global EV demand by producing both electric and internal combustion engine vehicles at its domestic and overseas plants.
At its AutoLand Gwangmyeong Plant 2 and the Hwaseong IBO Plant, two factories will be dedicated to the production of electric vehicles, expanding the output of mass-market models.
Kia aims to respond to the global expansion of Chinese brands by accelerating its efforts in ▲ Strengthening brand differentiation through product competitiveness ▲ Enhancing quality competitiveness and customer service satisfaction ▲ Creating sales demand by entering new markets with PBV, and leveraging Chinese plants to target emerging market demands.
Kia is enhancing product competitiveness in emerging markets, where Chinese brands are aggressively increasing their market share.
In regions like the Middle East, Asia-Pacific, and Latin America, Kia is actively expanding connected car services, aiming to provide them in a total of 74 countries (currently 41) by 2026, with 18 vehicle models applying OTA technologies (currently five) and a 63% or higher rate of ADAS installation (currently 42%).
Furthermore, Kia focuses on strengthening global quality competitiveness and enhancing customer service satisfaction. Utilizing over 6,200 global service bases and more than 34,000 service personnel, Kia aims to improve its service capabilities.
Kia has also outlined plans to create new sales demand through PBV. By utilizing the PBV platform and flexible production system, Kia aims to enter the B2B market as well as actively drive B2C demand.
Finally, a full-scale push into emerging markets leveraging Kia’s Chinese factories is underway. Kia has completed the system for producing vehicles for emerging markets at its Chinese facilities over the past two years, aiming to increase sales in emerging markets from 80,000 units in 2023 to 250,000 by 2027 (wholesale basis).
This year, the global automotive market is facing sluggish demand due to weakened purchasing power from high interest rates and inflation.
In response, Kia plans to maintain appropriate inventory levels through flexible production operations based on demand and implement an optimal incentive operation strategy, continuing its focus on profitability and customer value.
Kia is also striving to innovate customer experiences across various touchpoints. The upcoming EV3 and K4 models will feature voice services using generative AI technology, with plans for further expansion in the future.
Customized digital service experiences will be offered at the purchase stage, along with optimizing offline channels and expanding experiential digital content in stores to continuously enhance customer value.
Kia has specified four goals to leap into a new dimension by 2030: ▲ Achieving global sales of 4.3 million units ▲ Selling 1.6 million electric vehicles ▲ Selling 250,000 PBVs by 2030 ▲ Executing responsible ESG management.
Kia presented its global sales target starting at 3.2 million units for this year, with an increase to 4 million by 2027 and 4.3 million by 2030.
Particularly, the sales of eco-friendly vehicles are planned to increase from 761,000 units (24% of sales) in 2024 to 2.482 million (58%) by 2030, reflecting a 3 percentage point increase over the previously announced target (55%), signifying a commitment to accelerate the shift towards an eco-friendly sales structure.
In major markets, Kia will sustain growth momentum by establishing an EV full lineup and enhancing product competitiveness while generating new demand through PBV. In emerging markets, it will differentiate the brand through advanced customer experiences and respond to increasing demand via production diversification.
EV sales are targeted to start at 307,000 units in 2024, moving up to 1.147 million in 2027, and reaching 1.6 million by 2030.
Kia will lower purchase barriers for electric vehicles by introducing mass-market models and continuing to present PBV models such as PV5 in 2025 and PV7 in 2027, with plans to establish a total of 15 electric vehicle models in a complete lineup by 2027.
Furthermore, Kia aims to strengthen its future electric vehicle competitiveness by improving battery performance and cost-effectiveness, focusing on enhancing the energy density and driving range of existing NCM (Nickel-Cobalt-Manganese) batteries, along with securing cost competitiveness for mass-market models using LFP (Lithium Iron Phosphate) batteries.
Kia is also actively expanding its charging infrastructure strategy. Domestically, it plans to establish over 5,400 E-Pits, increasing from the current 482 by 2030. In North America, through IONNA, 30,000 charging stations are planned by 2030, while in Europe, over 17,000 stations will be established in partnership with IONITY.
Kia outlines four core product strategies to achieve its mid-long term sales objectives: ▲ Connectivity services ▲ Autonomous driving technology ▲ Performance ▲ Design, leveraging corporate capabilities for differentiated product development.
Kia aims to gradually expand new services based on connectivity, including OTA (Over-the-air), FoD (Features on Demand), and in-car payment technologies, into major emerging markets.
Specifically, Kia plans to continuously enhance the safety of autonomous driving technologies utilizing AI for fuel-efficient driving based on 5G networks and further improve OTA capabilities. Moreover, the company is developing an integrated platform to maximize synergies between hardware and software for advanced vehicle connectivity, establishing SDVs (Software Defined Vehicles) based on this foundation.
Kia is also concretizing its blueprint for autonomous driving technologies. The company is upgrading its Highway Driving Assist and plans to expand its capabilities to urban autonomous driving by developing precision sensors and autonomous driving software continuously by around 2026.
The release of the EV9 GT next January will also see the continued launch of high-performance electric trims. Additionally, Kia aims to maximize convenience by maintaining vehicles in the latest condition through OTA technology that incorporates the latest software.
At CES this year, Kia redefined PBV as ‘a platform beyond vehicles,’ showcasing its unique PBV that organically connects people, objects, and society, indicating its intention to lead the future mobility market.
To achieve this, Kia will launch its first medium-sized PBV, PV5, in 2025 and fully develop its PBV business. The large PBV with the most spacious interior, PV7, is also scheduled to launch in 2027.
Kia anticipates being able to sell 150,000 PV5 models, 100,000 PV7 models, and a total of 250,000 units by 2030.
Kia established its ESG vision last year with the aim of ‘sustainable movements for an inspiring future,’ setting three core values: ▲ Leading eco-friendliness and circular economy for the planet ▲ Building a safe and satisfactory society for everyone ▲ Establishing transparent and trustworthy governance.
In the environmental sector, Kia is pushing forward with RE100, aiming to replace all electricity demand at its global sites with renewable energy by 2040, with targets of 66% by 2030, 82% by 2035, and 100% by 2040.
Notably, the targets for 2030 and 2035 have been increased by 3% and 4 percentage points, respectively, compared to the targets announced at last year’s CEO Investor Day.
Kia is also actively fulfilling its social responsibility to strengthen the automotive industry’s ecosystem and contribute to local communities through collaborative growth with its partners. To that end, Kia is implementing various support policies, such as providing loan interest support and adjusting payment timings to ensure its partners secure profits and liquidity.
Additionally, various community outreach activities are being conducted, including tidal flat vegetation restoration and marine plastic waste collection and recycling projects.
In terms of governance, the board is composed of more than half outside directors, and Kia is recruiting outside directors with expertise in strategic investment, finance, accounting, and other areas, while simultaneously increasing the proportion of female outside directors to over 50%, thereby enhancing diversity and striving for responsible management based on professional capabilities.
Kia also presented specific business plans and mid-long term financial targets for 2024.
Global automotive demand in 2024 is projected to increase by 1.5% year-on-year to approximately 81.83 million units. Kia aims to sell 3.2 million vehicles, a 3.6% increase from the previous year (wholesale basis), and reach a global automotive market share of 3.8%.
This year’s strategy includes launching two new models: the dedicated electric vehicle mass-market model EV3 and the K4 produced in its Mexican plant; three models for product improvement—K8, Sportage, and EV6; and two derivative models—K3 5DR and EV6 GT, to maintain global sales momentum.
For its 2024 financial goals, Kia has set aims of ▲ 101.1 trillion KRW in revenue (an increase of 1.3% over the previous year) ▲ 12 trillion KRW in operating profit (a 3.4% increase) ▲ and an operating profit margin of 11.9% (a 0.3 percentage point increase).
Kia attributes last year’s high profitability to ▲ Strengthening brand value through design and product quality ▲ Improving product added value and implementing ‘getting the right price’ policies ▲ Cost competitiveness through efficient cost management. This year, Kia plans to continue outpacing the average profitability of global automotive firms.
In the short term, the goal is to maintain current profitability based on the cost competitiveness of EVs and the high profitability of internal combustion and hybrid vehicles, while in the long term, it aims to secure more than a 10% operating profit margin by creating new revenue streams based on a successful electrification transition centered around SDVs.
Key elements for achieving mid-long term targets include: ▲ Flexible operating strategies utilizing mass-market EV models ▲ Reducing costs of key components through research and development and battery diversification ▲ Strengthening profitability through expanded HEV sales ▲ Generating added value by expanding areas of SDV-based business.
Kia announced a total investment plan of 38 trillion KRW for the next five years, an increase of 5 trillion from the existing five-year plan (2023-2027). This includes 15 trillion KRW for future businesses and plans to invest 65% in electrification, 19% in PBV, 8% in SDV transition, 5% in AAM/robotics, and 3% in others.
Kia will also continue its shareholder return policy to maximize shareholder value. The company will maintain a dividend payout ratio of 20-35% of net income, taking into account future investment resource acquisition, corporate value enhancement, and shareholder value improvement.
Furthermore, Kia plans to buy back 500 billion KRW in treasury shares annually over the next five years, with 50% of those shares being canceled. In particular, they plan to implement an additional 50% cancellation if the financial targets are achieved by the third quarter of this year, signaling a proactive return policy to meet market expectations.
Author: Sang-jin Lee (daedusj@autodiary.kr)