South Korean carmaker Kia announced an update of its ‘Plan S’ strategy for its future business at the 2021 CEO Investor Day, held digitally on Tuesday in Seoul.
The renewed Plan S strategy is underpinned by three core pillars: advancing electric vehicle (EV) transition, strengthening purpose-built vehicle (PBV) business, and expanding future mobility services.
Ho Sung Song, president and CEO of Kia Corporation, who presented the mid-to-long-term roadmap, said, “Kia is being reborn in 2021 with a new logo, new design, and new corporate name. Kia will transform into a brand that excites and inspires customers with innovative mobility experiences.”
Plan to sell 1.6 million eco-friendly vehicles annually by 2030
By 2030, eco-friendly vehicles such as EVs, HEVs and PHEVs will make up 40% of all sales by Kia, with an annual sales target of 1.6 million units. As part of this, the automaker aims to grow EV sales to 880,000 units in 2030.
Starting with the launch of its first dedicated EV later this year, Kia will strengthen its EV lineup by 2026 with 11 new models, seven dedicated EVs built on the Electric-Global Modular Platform (E-GMP) architecture, and four based on the existing ICE derivatives.
EVs built on E-GMP aim to set new benchmarks in all-electric range (AER), driving performance, interior space, and tech application, Kia said in a statement. The EVs will be equipped with audio video navigation telematics (AVNT), over-the-air (OTA) and feature on demand (FoD) services.
The first dedicated EV from Kia, codenamed CV, will be featured with HDA2 (highway driving assist level 2) technology. Starting in 2023, Kia EVs will be equipped with highway driving pilot (HDP), a crucial autonomous driving Level-3 development.
The company said it will reveal the product details and performance specifications for the CV next month.
First PBV model in 2022; to sell 1million units annually by 2030
Kia said it will unveil its first purpose-built vehicle (PBV) in 2022, with further PBVs to be launched according to market needs.
The company is targeting annual sales of 1million units by 2030. To this end, Kia will develop a variety of specialised vehicles based on its PBV-dedicated skateboard platforms.
The Hyundai sibling plans to expand its PBV business through open innovation by cooperating with other companies to develop micro/large board platforms for unmanned delivery and e-commerce sectors.
The carmaker will also advance its own scalable small board platforms and technologies since the company expects market demand for these services to increase globally.
Diversifying services to meet customer needs
Kia’s mobility services will be targeting and focusing on core areas. In the business-to-consumer domain, Kia will expand the existing services.
In Spain, the company’s flagship car-sharing service Wible will be expanded with Wible Más and Wible Empresas (tentatively named). The car usership service ‘KiaMobility,’ which was launched in September last year as a pilot project in Italy and Russia, will also launch in other European markets.
In the business-to-government and business-to-business, Kia will launch an EV-based service that combines subscription and car-sharing. Under this new mobility service concept, vehicles will be used for business on weekdays and rented by individuals on the weekends.
Kia’s subscription programme Kia Flex, which was introduced in Korea in 2019, will launch a global version later this year under the name ‘Kia Subscription.’
The service will be operated by Sixt Leasing, which was acquired by Hyundai Motor Group last year, and the vehicles will be provided by the company’s regional affiliates and dealers.
Future business plans
Kia forecasts operating profit growth this year, based on increased sales volume and improved average selling price (ASP) and product- mix.
The company expects 2021 global sales to be 2,922,000 units, witnessing 12.1% year-on-year (YoY) increase. The 2021 revenue is pegged at KRW 65.6 trillion, up 10.8% YoY. The 2021 operating profit is forecasted to be at IKRW 3.5 trillion, increasing by 70.1%.
With increased profitability for new EV models, Kia revised upward its operating profit margin targets from the figures initially announced last year. Kia now targets 5.4% operating profit margin in 2021, and 7.9% operating profit margin in 2025.
Factors leading to increased operating profit margin
·Balanced growth in both advanced and emerging markets
Kia plans to expand its mid-to-long-term sales to 3.8 million units in 2025. The percentage of eco-friendly vehicle sales, which is expected to reach around 10% of total sales by 2021, is forecasted to increase to 22% by 2025. For emerging markets, the company will expand its market share through local CKD (complete knock-down) production.
·Product-mix improvement
The automaker expects that the ASP and product-mix improvement, which led to the company’s profitability enhancement last year, will continue. In particular, the company’s RV (recreational vehicle) sales share is expected to continue to rise from 56% in 2020 to 65% in 2025.
·Improving profitability of electric vehicles
It is expected that Kia will enter a new level of EV profitability with the release of CV later this year. The company expects to achieve profitability at the level of the existing ICE models in 2025. The company also predicts that EV cost improvement will be continuously strengthened through economies of scale due to the expansion of EV volume and the reduction of material cost through R&D investment.
Kia’s investment outlay from 2020 to 2025 is expected to be KRW 29 trillion. Kia will maintain the annual investment level of around KRW5 trillion, reducing the current investment in the existing traditional business segments while gradually increasing the proportion of strategic investment for future projects. The company will also expand its investment in R&D.
