Kia Corporation (A000270) Earnings Call Transcript & Summary

[Interpreted] Hello. This is Seong-guk Jeong, Head of Investor Relations at Kia. I will begin with business results for the third quarter of fiscal year 2025. I'll commence with the sales summary, followed by the consolidated income statement, revenue and earnings analysis; and finally, the consolidated balance sheet. First, I'll begin with the global retail sales performance. In Q3 2025, global industrial demand increased by 4% year-on-year due to continued strong demand for ATVs in the U.S. market increased EV purchases by consumers ahead of the expiration of IRA subsidies and economic stimulus measures in the Chinese market. Kia's global retail sales witnessed a 5.5% growth year-over-year led by higher sales centered around the Sportage HEV and Carnival HEV in the U.S., and the new EV4 model in the domestic market keeping our global market share steady at 3.6%. By market, domestic sales grew by 10.3% year-over-year driven by the increased RV sales centered on the Sorento and Carnival and the new model effects of the EV4. In the U.S. market, amid continued strong demand led by HEVs and a surge in EV demand ahead of the expiration of IRE subsidies, overall market demand remained more solid than expected, rising 6.3%. During this period, our sales increased by 11.1%, outpacing industry growth driven primarily by strong performances from the Sportage HEV and Carnival HEV, resulting in our market share expanding to 5.3%. In the European Western European market, despite continued strong sales of the EV3, overall sales declined due to the discontinuation of certain models and temporary production adjustments associated with electrification transition at the Slovakia plant. However, entering the fourth quarter, we plan to further solidify our EV leadership by completing our mass EV lineup with the launches of the EV4 and EV5 amid rapidly growing market demand for EVs and by entering a new segment with PV5. In the Indian market, sales declined by 3.2% year-on-year to a 5.9% market share due to deferred demand ahead of the goods and services tax rate cuts implemented on September '22. However, with the launches of the Clavis EV and the full model change of the Seltos, sales are expected to return to a growth trajectory in the fourth quarter. Major emerging markets achieved sales growth centered on the Middle East and Africa and Central and South America markets driven by the strategic expansion of export volumes from Chinese plants. Next is our electrified vehicle sales summary. In Q3 2025, electrified vehicle sales increased by 32.3% year-over-year to 204,000 units driven by strong demand for HEVs in the U.S. market and EVs in Western Europe. As a result, the share of electrified vehicles in our global sales expanded by 5.4 percentage points from 21% in Q3 2025 to 26.4% in Q3 2025 and sales mix for HEVs and EVs accounted for 15.2% and 9%, respectively. By model, the sales growth in HEVs was led by the Carnival, while in EVs, the growth was driven by the EV3 and EV4. In the third quarter, the Carnival HEV continued to expand its penetration in the U.S. midsized MPV HEV segment maintaining a 27% market share and together with the robust performances of the Carnival and Sportage drove U.S. HEV sales up over 87% year-over-year expanding its market share to 6.4% as of July, August 2025 from 4.2% in 2024. In Western Europe, positive market response and solid demand for the EV3 continued, while the launch of the new EV4 in the third quarter, further boosted Kia's EV market share in the region to 4.2% as of July, August 2025 from 3.2% in 2024. Kia plans to further strengthen its position as a leading global brand in electrification by completing a full lineup of mass EVs with the EV5 in the fourth quarter and the EV2 early next year, while also adding new models to the HEV lineup such as Telluride and Seltos to swiftly respond to evolving demand and regulatory changes in advanced markets such as Western Europe and the U.S. The following is the regional wholesale performance. In Q3 2025, Kia's wholesale increased 2.8% year-over-year to 785,000 units. Looking at the key regions, North America saw a 2.3% growth year-on-year to 279,000 units owing to expanded shipments of the carnival and Sportage HEV based on robust HEV led demand and stronger SUV focused wholesale volumes. In Europe, despite strong sales of the EV3, sales volume declined by 2.9% year-over-year to 128,000 units due to the discontinuation of certain models and production adjustments associated with electrification transition at the Slovakia plant. In India, sales fell to 3.2% year-on-year to 64,000 units due to increased deferred demand ahead of the GST rate cuts. Finally, in the Rest of the World, such as the CIS region, sales increased 45.6% year-on-year to 11,000 units owing to expanded sales of the -- produced at the Uzbekistan plant. Next is the consolidated income statement. In Q3 2025, revenue reached KRW 286.6 trillion, up 8.2% year-on-year, backed by a 1.8% increase in consolidated sales represented an additional 13,000 units stronger HEV EV sales centered on advanced markets and higher ASP resulting from continued price effect based on product value added. Operating profit recorded KRW 1.462 trillion, down 49.2% year-on-year, mainly due to the impact of the 25% tariffs and higher warranty and R&D expenses. However, the operating margin for the third quarter stood at 5.1%, led by strong sales of the Sportage and Carnival HEV underpinned by robust demand in the U.S. disciplined operations focused on residual value management by executing incentives at around 60% of the U.S. industry average and maintaining effective cost control. Next, operating profit analysis. Breaking down the evolution of operating profit by sector. First, the application of 25% U.S. tariffs impacted our third quarter performance as well, reducing profit by [ KRW 1.24 ] trillion, despite efforts to reduce incentives in the U.S. market to mitigate the impact of tariffs, increased spending for competition in the European market led to a KRW 264 billion Y-o-Y increase in consolidated incentives, reducing earnings. The negative mix impact due to the high base effect last year continued in Q3. Nevertheless, a boost in new vehicle sales in Q3 limited its impact to KRW 59 billion, improving the visibility of a shift to a positive effect in Q4. Additionally, factors such as increased sales warranty costs due to the rising quarter-end yuan to dollar exchange rate and higher SG&A expenses, including R&D costs led to a Y-o-Y decline in operating profit. However, Kia largely mitigated the negative impact to its profit through volume growth and pricing effects. Volume growth in advanced markets, particularly in the U.S. HEV segment and rational mix improvements contributed KRW 160 billion. Price effects from enhanced product value-added contributed KRW 118 billion and favorable exchange rate effects from the week 1 contributed KRW 253 billion to profit improvements. As a result, our operating profit for the third quarter of 2025 amounted to KRW 1.462 trillion, a decrease of KRW 1.419 trillion Y-o-Y. Next, revenue analysis, first, based on the original sales share data on the left Consolidated sales revenue increased by 8.2% Y-o-Y despite sales growth in North America, driven by expanded wholesale units and higher ASPs for HEVs and SUVs, its share decreased by 1.1 percentage points from 46.4% in Q3 last year to 45.3% in Q3 2025. In terms of domestic sales, the launch of the new Tasman EV4 and the expansion of operating days contributed to an over 10% increase in sales on top of which an improved RV-focused mix led to a 5% increase in ASP, increasing the sales contribution by 1.3 percentage points from 16.8% in Q3 last year to 18.1% in Q3 2025. Despite a decline in wholesale units, Europe's revenue share remained similar to that of the previous year at nearly 21%, supported by ASP growth driven by strong EV3 sales and a favorable EUR 1 exchange rate. India's revenue share decreased by 0.3 percentage points Y-o-Y due to weaker sales. Now moving on to the ASP improvements on the right. The global ASP for Q3 2025 rose 6.3% Y-o-Y to KRW 38.6 million, driven by expanded HEV, EV sales centered in advanced markets and positive exchange rate effects domestic ASP also rose 5% Y-o-Y to KRW 35.5 million, maintaining strong growth momentum. Next, cost of sales and SG&A. Despite volume growth, increased ASP-driven revenue expansion and favorable foreign exchange effects, the cost of sales ratio for Q3 2025 rose 4.3 percentage points Y-o-Y to 81.1% due to the previously mentioned impact of U.S. tariffs that amounts to [ KRW 1.24 ] trillion. Without the tariff impact, however, the Q3 cost of sales ratio is estimated to have remained at last year's Q3 level at 76.8%. The SG&A ratio for Q3 rose 1.5 percentage points Y-o-Y to 13.8%, driven by increases in warranty expenses and R&D costs. The sales warranty expense ratio rose 0.9 percentage points Y-o-Y to 5.4%. This was mainly driven by the depreciation of the yuan -- depreciation of the yuan, sorry, against the dollar at the end of Q3, R&D expenses increased Y-o-Y, accounting for 2.2% of sales revenue, primarily due to higher predevelopment research costs at the R&D center. Next, operating income. First, equity method gains increased by KRW 49 billion Y-o-Y to KRW 161 billion, driven by higher profits at some affiliates. Financial and other nonoperating income increased by KRW 24 billion Y-o-Y to KRW 263 billion, reflecting FX related gains due to volatility in the yuan dollar exchange rate. As a result, net nonoperating income expense for Q3 2025 increased by KRW 74 billion Y-o-Y to KRW 425 billion. Last but not least, the balance sheet as of the end of Q3 2025. Total assets amounted to KRW 97.984 trillion, an increase of [ KRW 5. 8 ] trillion compared to 2024 year-end. Key factors driving this asset expansion include increased liquidity, growth in tangible and intangible assets and an increase in inventory assets. Total liabilities at the end of Q3 2025 reached [ KRW 39.224 ] trillion, an increase of KRW 2.308 trillion compared to the end of the previous year, despite a KRW 923 trillion reduction in borrowings, liabilities temporarily increased compared to 2024 year-end due to higher accounts payable and increased accrued expenses, following the reflection of KRW 1.1 trillion in employee performance bonuses, which were paid in early October. Total equity stood at KRW 58.759 trillion, an increase of [ KRW 2.9 ] trillion compared to the end of the previous year, the debt-to-equity ratio rose by 0.7 percentage points Y-o-Y to 66.8%. This concludes the earnings results for the third quarter of fiscal year 2025. Thank you.

[Interpreted] Next, Kia, [indiscernible] Senior Vice President, Seung-Jun Kim will deliver a review on Kia's earnings for the third quarter of 2025 and business outlook for the fourth quarter.

[Interpreted] Hello. I am Kim Seung-Jun. So regarding the profitability of the third quarter, we would like to give you the main element. So as we have said, in third quarter, the tariff impact has been more pronounced and with the entry of Chinese companies, the market volatility was very high. However, even in these key situations, particularly in the U.S. market, there has been meaningful growth that we have realized and from a revenue perspective as well, we have been able to sustain a strong upward sales trajectory, which is a great performance for Kia. By region, to explain, for the United States, compared to the year before, we have 11% growth in sales, and we have the new Carnival HEV, Sportage PHEV and HEV led growth has been achieved also Telluride in its last model year is expanding in sales as well. And in H1, as we have explained, Kia's low incentives have been maintained and maintenance of our residual value has been achieved as well. Although sales have grown, we don't use high incentive rates, but we have efficient incentives executed and maintained our residual growth while growing our sales, which is our biggest advantage in this difficulty. However, for the European market, there was the electrification transition in the Slovakia plant. Therefore, there was the temporary down of UPH and also, there was a discontinuation for partial models, and so there were difficulties faced. However, there are 40% growth that was EV led. And in the fourth quarter, we have EV4 and PV5, and therefore, EV sales will be fueled by these models. Also from a revenue perspective, hybrid and in EV mix, improvement and for high advanced safety, convenience specs that will be expanded. We believe that revenue will be -- has been high. From a profitability perspective, as you're well aware, the tariff impact was the biggest compared to the year before. It was KRW 1.4 trillion of impact, but KRW 1.2 trillion has been impacted by tariffs. And as we said, at the end of the year, foreign exchange rate fluctuations and foreign currency in our warranty provision has deteriorated our profitability. However, our sales growth is continuing on and we are continuing to add on to the product value and one of our advantages or of our raw material cost or labor cost reduction is continuing on. With that, we have been able to have efficient cost control. This basic Kia's fundamentals are being maintained without change in these hardships and all of the investors here share, to you, we would like to show you the fundamentals that we have been able to maintain. And also in the fourth quarter and next year, the fourth quarter, the industrial demand in the United States will continue on. So in H1 earnings results, we said that in H2, the industrial demand in the United States, we thought it would go down. But unlike our expectations, our industrial demand will be robust. In particular, for hybrid, there will be strong demand for HEVs that will continue. In Europe, although it's hard compared to the year before, for ICE, compared to ICE, EV is growing amid this we have EV4, EV5 and PV5 that will be launched at the end of November. And we have EV2 next year, which is an entry-level EV that will be released as well. With this in mind, in Europe, so according to the change in the market, we have aligned our strategies. Therefore, we can show our strong advantage there. Based on that, in next year as well compared to this year, we will continue to grow. And in that aspect, after the confirmation of the specific numbers, we will be able to explain again. If we look at the third quarter performance, we had an opportunity to reflect that ourselves because the external factors or tariffs, what will be added are something that is uncertain. Next year and going forward, the external conditions, not only the tariffs but there will be unexpected other external economic conditions that will become risks that may appear continuously. And if that's the case, then the changes in the external circumstances, whether we will fall down and sit on our hands, we have reflected ourselves to show that we should not sit on our hands anymore, and we should take action. We have reflected ourselves in this quarter. And based on this, what we've done existingly not only the internal fundamental improvement, but additionally, the internal environment will be strengthened in our fundamentals and also reduce our costs. We will move with urgency and strengthen our fundamentals. Those are the efforts that we're doing. We won't be -- we will stay strong and stable, no matter the environment. We will put all our efforts into maintaining that stability. Thank you.

Now we'll begin the Q&A session. [Foreign Language]. [Operator Instructions]. [Interpreted] The first question will be provided by Moonsu Chang from Hyundai Motor Securities. Please go ahead with your question.

[Foreign Language]. [Interpreted] Hi, I'm Chang Moonsu. I am from Hyundai Motor Securities. I have 3 questions. One, the eight page regarding the operating profit analysis, I would like to ask about the increase in the other costs. For example, in the warranty provision expenses compared to usually I think that there has been a KRW 350 billion increase, therefore, even if we consider in mind, the year-end, the quarter end foreign exchange fluctuations, it is higher than expected. So is there a special reason for this? The second question is regarding the R&D expenses. And during the presentation, you mentioned about the predevelopment research and R&D expenses that was included in the R&D. However, compared to on average, I think there's about KRW 20 billion to KRW 30 billion increase. So is this temporary? Or will this R&D expense cost be maintained? The third question is on the tariffs. And does this include the part of reduction in the tariffs, because if there are the inventory that has been depleted for parts, maybe there has been impact there. So we would like to ask that there is impact for the tariffs there.

[Foreign Language]. [Interpreted] Regarding the warranty expenses, yes, there is the impact of the quarter end fluctuations in the foreign exchange rate. But separate from that, there was the campaign cost that are centered around the software updates and which contributed to the increase temporarily on the ratio of the warranty expenses. The second, regarding the increase in R&D costs. We have talked about this in the CID and Investor Day. And so we -- not only do we invest in the investment that we currently do, but we also invest in new projects as well as new investments as well, and we cannot reduce such investments even with the difficult conditions that we are facing. Therefore, this contributed to the increase in R&D costs. And for Kia, this year and next year, we have the PBV new car that's based on SW and LW, which are also factors. Regarding the tariffs, yes, we have included the import parts as in the tariffs as well. And adding on to the response regarding the warranty expenses, we have -- if we release new cars, there's the warranty expenses per unit that goes up when the new car is released and then after the mass production, it reduces. And this year, we had a lot of new releases of cars. Therefore, that has been reflected in the third quarter.

[Foreign Language]. [Interpreted] Regarding the quality costs, we have continued to increase and strengthen our criterion standards for quality management and we've taken measures proactively in order to control our quality. And regarding this, we have the claim ratio that has been reduced to 2.5%, which is lower than the industry average. And we are continuing on to do our quality sensing using our dedicated organization that is dedicated for the quality sensing proactively. Even if it's small issues by the model year and the model type, we are trying to proactively sense the issues that may appear. And this year, we have been able to identify 10 items proactively by sensing and monitoring ahead of time like the ECU upgrade as well as software upgrades have been proactively done. And these are some of the measures that we have done in order to block bigger issues from happening, which has been reflected in the third quarter.

[Foreign Language]. [Interpreted] The following question will be presented by Paul Hwang from Citi Securities.

[Foreign Language]. [Interpreted] My name is Hwang Paul from Citibank. I would like to ask some questions about the graph that you showed us and some other costs that you talked about. For example, in Q3 2024, there was an increase in diverse costs. You just explained, provided an explanation about the increase in R&D costs and also the quality cost. And there were some other expenses that I was worried about. So I would like to ask you about the state of the market and also about the market tariff mitigation effect because I think that the mitigation result was smaller than what you had expected and what you presented in the previous quarter earnings call. So for example, initially you expected to set off the tariff effects by about 60%. And I would like to know what is the results for Q3? And if you can expect further reduction of the tariff effects in Q4 and in what items? My second question is regarding the Experian noise that we have been hearing about. If this problem continues in the mid to long term. Do you have any plans to respond to this issue?

[Foreign Language]. [Interpreted] Thank you for your questions. You have mentioned some concerns about the increasing warranty costs, for example. I think that the FX effect has something to do with the results Y-o-Y. And I must confess that there are some quality campaigns that we are conducting preemptively. So these campaigns are having an impact on the warranty costs. That is true. And also the fact that we are launching new models, that is also incurring some costs and having an effect on the quality side of the expenses, and additionally, what we can tell you on top of what we already told you is that the inflation is also having an effect on the labor cost, which is increasing and also the cost of parts that are rising as well. So these are some factors that are influencing the increase in quality costs. You also mentioned being curious of our efforts to reduce the tariff effects. So what can be done is being done on our parts there is no delay that I can assure you. And there is no timing effects that will be having an impact on the mitigation efforts regarding the tariffs.

[Foreign Language]. [Interpreted] I would like to add something about the Experian issue. So during the COVID epidemic. We have experienced some disruption in our supply chain. So what we have come up with after we experienced that challenge is that we are separating our supply of general parts and key components. So for example, for strategic components, we had a more stable supply chain strategy, and we are also operating an alternative supply chain for those important parts. In the short term, we don't expect any disruption to occur. But if, let's say, any issues get prolonged in the long term, then there are some measures that we are putting in place that we have planned in the short and long term directly and indirectly. So we keep -- we are monitoring the supply chain status continuously. If there are any issues, however, that occur, then we do have some strategies to respond to them. So I don't expect them to impact our production activity in absolute terms.

[Foreign Language] [Interpreted] The following question will be presented by Jinsuk Kim from Mirae Assets Securities.

[Foreign Language]. [Interpreted] I'm Jinsuk Kim from Mirae Assets Securities. I have 3 questions. The first is regarding the tariffs. And you have mentioned in the analysis, there will be impact of KRW 1.2 trillion, and it is monthly KRW 400 billion, as you have previously stated in your previous earnings call. And so if you look at the fourth quarter, and it will be applied from November 1, partially and moving on, then KRW 400 billion of October and KRW 250 billion, and KRW 250 billion each in November and December. And in total, we think it will be KRW 900 billion. So would this be the tariff cost that we should expect? And second question is regarding the dividends payout. And so there were uncertainties of the performances until now. And looking at the last year's TSR, that was 35%, KRW 650 billion. Will this be continued on in this years dividend payout. As the tariffs have been reduced to 15% and confirmed there has been ease of concerns of the TSR, but will the KRW 650 billion that is the level of last year be the same for this year's dividend paying out. And the third question is on the cooperation with NVIDIA. There are a lot of hype towards the cooperation with NVIDIA and there are a lot of people that are actually putting in a lot of attention in the cooperation. If you look at the Investor Day announcements from Hyundai Motors and Mobis, they said that there will be a demonstration that will be done in May and June. And also in 2028, there will be the sales that will start. For Kia, will it be the same time line.

[Foreign Language]. [Interpreted] The person that's asking the question is someone that is really familiar with our company, we have burden on responding to the questions. First, regarding the tariff impact. Tariff impact in the fourth quarter will be similar to that of the third quarter, although it will be implemented of the 15% of tariffs from November 1, it will be retrospective. And therefore, we already have the inventory that has been applied with the 25%. And therefore, we believe that the impact will probably be the November sales that will be impacted. Then it will probably be similar to the impact of the third quarter. Of course, it will be a little bit lower, but the gap will not be that big and the impact will be fully reflected in next year performances. The second question regarding the dividend payout, we have announced and promised our shareholders about our dividend payout already. Therefore, we will maintain and keep that promise. Regarding the third question for the smart car plans, we also have the same time line as the other companies, and so our release and the time line will not be different.

[Foreign Language]. [Interpreted] The last question will be presented by Chang Kim from Korea Investment & Securities.

[Foreign Language]. [Interpreted] I have 3 to ask you. The first one is regarding sales in America. I know that there is some discrepancy between the sales and the wholesale units and retail sales and especially the wholesale units is a little bit lower than the retail sales. Is that because of inventory management or another reason? My second question is regarding the lowering profitability. I would like to know the reason. To my knowledge, Kia has -- does Kia revert some of its reinvestments towards research and development and what is the ratio of that investment. Is there a change in Kia's policy regarding how to invest your profits for common R&D expenses between Hyundai Motor Company and Kia Motor Company, I know that the ratio -- distribution ratio is 6:4. What -- could you elaborate more on the differences? Is there any details that you can tell us about that? My third and last question is with regards to NVIDIA because we are hearing a lot of rumors in the market about Kia getting a chip from NVIDIA. So could you elaborate more on that? What is your long-term plan?

[Foreign Language]. [Interpreted] Thank you for your question. Regarding the first question for the discrepancy between wholesale units and retail sales. One of the major factors of that, I think, is the difference in inventory based on the model of the vehicle. And the second factor that I can cite is the difference in the contract timing when we do flip contracts. For your second question regarding R&D reinvestments, there is no changes in our policy or criteria. And I know that it may worry our investors to see some expenses increase. But I would like to ask you to please consider this as Kia's symptoms of growth, and it is not a symptom of a worsening profitability. Regarding your last question about NVIDIA's chips, we are thinking that this chip from NVIDIA will be helping us in the development of SDV or automotive vehicles in the future. Thank you.

[Foreign language] [Interpreted] The last question will be presented by Eun Young Yim from Samsung Securities.

[Foreign Language]. [Interpreted] I'm Eun Young Yim from Samsung Securities. I have 2 questions. The first question is regarding the EV industry growth that we are looking at in -- which is very high in the demand growth, but there are not -- if we exclude the ICE and just look at the EV, there are the EV3 and a lot of new cars that are being released from Kia's side. We have thought that the expectations were that it would exceed that of the industry growth, but it is actually falling behind. So compared to the Chinese OEMs, what is the drawbacks that we have on the Kia side and what are some of the strategies that you are taking in order to improve and go over the Chinese OEMs. And the second question is regarding the incentives. So the United States incentives have gone down the decrease of EVs and HEVs have gone up, but there will be new policies that will be implemented for European niche market. And so regarding the incentive directions, what are some of the guidances that you can provide us for the fourth quarter?

[Foreign Language]. [Interpreted]. During the Investor Day, the President has asking the question, we told you that we would like for you to continue on to look at what Kia's performance would be doing, but response that we got was that the answer feels really outdated. But I would like to say and emphasize one more time, but if you look at the Q4 results, then it will be normalized and Q3 is at its lowest point. And so if we look at it again, yes, in the European market, the EV growth has been 40%. However, there was the ICE that has not been able to go along with the growth of EVs and how we have fallen behind compared to the industry growth, as you've said, but looking at the pricing gap between the Chinese OEMs and for us, there's 25% of pricing gap. In the past, we were able to raise our prices along with the rise in raw material costs, but no longer can we have that policy in place, and therefore, we cannot increase our prices anymore. Then how can we compete with the Chinese OEMs. We have to look back at our fundamentals, and we have to increase our fundamentals and strengthen them also secure the competitiveness with ourselves and our new cars. And regarding the incentives compared to last year, it has gone up, yes. And the first half of last year, we were at 1,000 level in the United States, which was very low. And it was going on an upward trend and now is going back and being normalized. In the fourth quarter, the incentives will not change significantly compared to the third quarter and particularly in the United States, we do not believe that there needs to be change in incentives as there are sales that are growing without the change in incentives. Therefore, with the shortage of inventory, we will not change our incentives. In the European market, there is fierce competition that is ongoing, therefore, that will be -- there has been an increase compared to last year. But with the new release of our EVs, we believe that the incentives will be normalized in the fourth quarter and the beginning of next year.

[Foreign Language] [Interpreted] To add on a little bit more. Regarding the United States, there has been growth that has been led by the HEVs and we have been able to grow by 80% compared to the year before. With the Seltos and Telluride -- HEV that will be released soon. We believe that we will be able to achieve similar growth for -- so there the biggest driver for the United States was the hybrid, but for the United -- for the European market, the EVs is our major growth driver. This year, we have been able to grow by 70% for EVs in Europe. And in third quarter, our proportion of EVs took about 19% in the fourth quarter with the growth trajectory of the EV4 we'll be able to achieve 100% compared to the year before in our EV growth. And we believe that our proportion of sales will be able to reach 30%. And with the next year of EV2 release, the EVs in the European market will play a really big role for Kia. And we are the few companies in the world that has its full EV lineup that is not full lineup. And so we believe that even although the EV market has been slowing down in the European market, we will be able to grow with our leverage of EVs. And next year, we will be able to have a single mid- to late digit achieve in our sales growth through our mass EV lineup strategy. And so the EVs are a major powertrain in the European market, and we believe that it will continue on for 2 to 3 years.

[Foreign Language] [Interpreted] This concludes the fiscal year 2025 third quarter earnings results by Kia. If you have any further questions, please contact the Kia IR team directly. Thank you for your time and participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]