Kia Motors reported a 59% drop in net profits to KRW133.68bn (US$118m) in the third quarter of 2020 from a net profit of KRW325.8bn a year earlier, after the company made substantial provisions for recalls and to overhaul its quality management processes.
Like sister company Hyundai Motor , the South Korean automaker forewarned last week of a one-off provision, of Kia KRW1.26trn, to cover car recall costs relating to the group's faulty Theta II engine and other associated costs.
Hyundai Motor Group last year reached a settlement with car owners in the USA over problems relating to the Theta II gasoline direct injection (GDi) engine, including engine stalls and non-collision fires.
The automaker said apart from the provisions, it overall business performance continued to improve in the third quarter, with revenues rising by 8.2% year-on-year to KRW16.3bn. Operating profits fell by 33% to KRW195.2bn.
Global sales were just slightly lower at 699,402 vehicles in the third quarter from 702,258 units a year earlier, with overseas sales down by 1.3% at 562,678 units while domestic sales rose by 3.2% to 136,724 units – driven by strong demand for the Carnival minivan, the Sorento SUV and K5 sedan.
Global sales in the first nine months of the year fell by 8.8% to 1,863,966 units from 2,043,780 a year earlier.