Net profit of Kia in Q3 plunged due to recall costs
A recall of engine-related services forced Kia Corp, South Korea’s second-largest automaker, to cut its third-quarter net profit by 60 percent from a year ago. South Korea News Agency (Yonhap) reported that the company’s net profit for the three months ended September fell to 458.89 billion won (US$319 million) from 1.13 trillion won last year.
In the third quarter, Kia set aside 1.54 trillion won to cover recall costs and offer other customer services related to the Theta II gasoline direct injection (GDi) engine. The maker of the K5 sedan and Telluride SUV has reflected massive recall costs in its quarterly profits for the second time.
Hyundai Motor Group settled with car owners in the United States over problems with the Theta II GDi engine, such as stalling and non-collision fires. 1.3 trillion won was set aside by Kia for recall costs in the Q1 2020 results, while 2.1 trillion won was set aside by Hyundai Motor Co. for the same purpose.
Hyundai incurred recall costs of 1.36 trillion won this past quarter. In the third quarter, operating profit declined 42 percent from 1.33 trillion won a year ago to 768.23 billion won. Sales rose 31 percent to 23.16 trillion won from 17.75 trillion won during the same period. From January to September, Kia’s net income decreased 4 percent to 3.37 trillion won from 3.51 trillion won. Sales increased 20 percent to 63.39 trillion won, resulting in an operating profit increase of 19 percent.