Kia's EV5 electric SUV and Sonet compact SUV are displayed at the Beijing International Automotive Exhibition, Thursday. Courtesy of Hyundai Motor Group

Kia recorded its highest-ever quarterly operating profit of 3.42 trillion won ($2.49 billion) in the first quarter, thanks to favorable exchange rates, the carmaker said Friday.

In its first-quarter earnings announcement, Kia logged sales of 26.21 trillion won, up 10.6 percent from the same period in 2023. Operating profit increased by 19.2 percent.

The company said it sold 760,515 cars from January to March, down 1 percent year-on-year. Despite the decrease in sales volume, the company attributed its strong performance to stabilized raw material prices, favorable exchange rates and strong sales of high-priced models such as eco-friendly cars and recreational vehicles (RVs).

The company also cited higher average selling prices as a contributor to the increased operating income in the first quarter. During the period, Kia cars' average selling price rose by 12.2 percent to 36.1 million won from 32.2 million won in the first quarter of 2023.

"The global industry demand showed a limited recovery due to a slowdown in the growth of electric vehicle (EV) demand," a Kia spokesperson said. "Sales volume decreased year-on-year slightly due to weakened EV sales and a temporary shortage of supply for internal combustion engine and hybrid models."

Estimating its following quarters, Kia mentioned that while EV demand is slowing, there is an increase in demand for internal combustion engine vehicles and hybrid vehicles, and the company is focusing more on supplying hybrids.

"Due to the slowdown in EV demand and increased competition leading to price reductions, there have been sales difficulties, and incentives are also expanding," Joo Woo-jeong, chief financial officer of Kia, told investors during a conference call. "Conversely, there is a revival in demand for internal combustion engines, including hybrids. The company is focusing on supplying more hybrids to meet the demand."

In terms of EV business strategy, Kia plans to introduce a facelift version of its EV model EV6 and launch its EV3 in the second half of the year. The EV3 is scheduled to start mass production in Korea in June this year.

The CFO mentioned that despite the slowdown in EV demand and difficulties in the Indian market, there should be no issues in achieving the early-year target of selling 3.2 million vehicles and hitting 12 trillion won in operating profit this year.

"We expect that the difficulties encountered early in the EV era can actually highlight Kia's competitiveness and demonstrate the strength to sustain a high-profit structure," Joo said.