AnnuAl RepoRt 2010 _ Contents 04 Chairman’s Message 06 Vice-Chairman’s Message 08 Financial Highlights 10 Year in Review 12 2010 New Models 14 Hybrid Models & Concept Cars EnginE FuEl ignition KEy for SuccESS for innovation to SuStainability Through hard work, inspiration and strategic focus, 18 Domestic Business Performance 30 Design Management 42 Research & Development Kia has claimed its place as a major force in the 20 Overseas Business Performance 34 Branding 46 Global R&D Network world’s auto industry. We are now creating more 36 Marketing 48 Product Line-up value, for more people, in more ways and in more places than ever before. Kia Motors has successfully leveraged our strengths in business excellence that provides 50 Financial Review EnginE for Success, established design 122 Global Network as our fuEl for innovation, and invested 124 Company History 126 Board of Directors in new technologies — thE ignition KEy to 127 Contact Information SuStainability. The result has been one of our best years ever, and a clear path to sustainable growth. KIa MOtORs aNNuaL RePORt 2010 03 Chairman’s message The world’s auto market has endured volatile changes in the past few years. Companies that lacked the ability to adapt to change lost ground, while those that worked hard to prepare themselves for the new order were rewarded with impressive gains. The economic climate of recent years has taught us that we need to foster creative change and embark on endless challenge as core competencies if we are to triumph under any circumstances. In this time of uncertainty, the decisive factor in gaining market share will be our improved capacity to respond to the demands of the market and provide total customer satisfaction. 2010 was a landmark year for us, in which Kia Motors captured the attention of the world and earned the admiration of our customers and competitors alike. We have demonstrated our ability to tap into future drivers of growth under difficult circumstances; namely, Kia Motors used the economic slump to launch competitive new products that propelled the company to the ranks of the world’s top carmakers in terms of production and sales. The recent surge in sales volume has driven impressive gains in the company’s stock price, and corresponding improvements in Kia’s credit ratings. Just as important, we entered a new era in labor relations, joining hands with our union membership in an unprecedented spirit of cooperation and shared vision. Indeed, stable labor relations are crucial for our efforts to build brand value and be regarded by our customers as a trustworthy company. Although our achievements in 2010 were beyond significant, we refuse to rest in 2011. Sustainable growth is achieved through constant effort, and we will use our time wisely to strengthen the company’s fundamentals. Having only recently joined the ranks of the world’s most successful carmakers, we are now eager to solidify our competencies in production, Kia Motors will strengthen our sales, product development, design, quality management and R&D. As a global leading company, we will make 2011 another outstanding year in our company’s prestige in the global auto industry great history. Kia’s unique corporate culture has been reinforced and rejuvenated by our through creative changes and success, and we are striding forward to meet the challenges of the future with confidence and endless challenges. pride. Thank you. Mong-Koo Chung Chairman 04 COMPONENts OF sustaINaBLE GROwtH KIa MOtORs aNNuaL REPORt 2010 05 ViCe Chairman’s message team and swimming team, which had an unexpectedly Our management systems are being continually reevaluated strong performance at the Vancouver Winter Olympics and to ensure their sustainability. Procedures and rules are Guangzhou Asian Games, respectively. We gained real-time being realigned and harmonized, and a culture of creativity exposure to one billion viewers with our official sponsorship emphasizing focus on talent and our customers is being of the FIFA World Cup South Africa, which helped significantly spread throughout the company. raise the recognition of our brand. Kia Motors views product quality and passenger safety Meanwhile, the market has welcomed our new generation of as our foremost concerns. The company invests heavily in products, and the numbers speak for themselves. Last year, technological improvements that enable us to earn the trust Kia sold 2.13 million units worldwide, recording revenues of and respect of the world’s motorists. We are also expanding KRW 42.29 trillion, operating income of KRW 2.84 trillion and our investments in green technology research, as we intend net income of KRW 2.64 trillion. for Kia Motors to be a world leader in the production of low- carbon automobiles. On behalf of the entire staff and management of Kia Motors, please accept my thanks for your consistent encouragement Such a culture helps to define a workplace that nurtures self- and faith. We know that all of our achievements have been esteem in all its members, and where labor-management possible only because of the continuing support of our relations are handled in an atmosphere of trust and mutual investors. respect. Our staff and management bond together through shared volunteer work, and take pride in Kia’s many social Distinguished shareholders, contribution activities. We are also building an image as a The global market is in the midst of a period of unprecedent- caring corporate citizen that is concerned as much about the ed change, and companies who are not positioned to cope growth and success of its business partners as it does about Dear shareholders, may find themselves marginalized. The technology gap be- its own. Kia Motors will continue 2010 was a year in which Kia Motors attracted the attention tween the leaders and the followers is narrowing, and com- and respect of the global industry as the ‘New Kia’. petition to occupy the top positions in the green car market of Beloved shareholders, on its path of success, the future is becoming increasingly fierce. We have reached our current heights thanks primarily to your Early in 2010, we successfully launched the Sorento R (known commitment, support and encouragement. Be assured that overseas as ‘Sorento’), Sportage R (Sportage) and K5 (Optima), achieving our goals We have set an ambitious goal to increase global sales by we are working hard every day to repay you by meeting all of driving our global sales and production above 2 million units more than 14.1% over last year, targeting a volume of 2.43 our goals with dedication and a pioneering spirit. and meeting market and securing Kia Motors a place among the world’s top ten million units. carmakers. I ask for your continued encouragement and support, and changes with unyielding Kia Motors has developed a strategic management plan wish you and your family good health and happiness. Kia’s record-high financial achievements are even more for 2011 that will raise the company’s international profile a dedication. pleasing in light of our recent strike-free year in 2010 and global carmaker. To this end, we will strengthen our market Thank you. excellent relationship with the company’s unions. These factors leadership through innovation and building brand value; we have combined this year to set Kia’s stock price on a path to will advance our profit leadership with visionary management record-breaking highs. planning; and we will establish the foundation of our sustainability leadership by securing solid growth engines for Turning to our core competency of design, the K5 and Sportage the future. R were honored with the 2011 iF Design Award, one of the world’s top three awards in the field of design. In Korea, the Kia’s immediate strategy for raising product competitiveness K5 and Sportage R also ranked first and second in the ‘2010 is to successfully launch exciting new versions of the Morning Auto Design of the Year’ competition, providing yet another (known overseas as ‘Picanto’) and Pride (Rio) while also affirmation of the growing value of the Kia Motors brand. introducing the K5 Hybrid. In addition, we are elevating our Hyoung-Keun Lee ability to mount rapid, effective responses to changing market Vice Chairman Kia Motors’ brand value has skyrocketed in recent years, conditions by establishing a system of organic cooperation thanks in large part to our strategic marketing activities. Kia and open communication among all our worldwide sales and remains a steadfast supporter of the national speed skating production divisions. 06 COMPONENts OF sustaINaBLE GROwtH KIa MOtORs aNNuaL REPORt 2010 07 Financial HigHligHts consolidated Performance consolidated Performance 2010 2009 2008 2007 2006 Sales Revenue Operating Profit Operating Profit (Unit: KRW in billions) (Unit: KRW in billions) % of Revenue SaleS Volume (Units) 2,129,948 1,533,606 1,399,236 1,359,956 1,258,851 Korea 1,400,293 1,142,038 1,056,400 1,114,451 1,140,734 Overseas 729,655 391,568 342,836 245,505 118,117 6.7 1,531 2,836.1 Summarized Balance Sheet (KRW in millions) 42,290.3 1,1454.1 1,137 total assets 27,593,159 25,962,876 25,583,550 19,461,002 17,342,939 Cash Items 3,057,223 2,791,688 1,406,211 1,151,957 1,017,512 29,445.2 Current Assets 11,463,545 11,208,990 11,709,967 8,369,696 7,310,750 1,195.2 22,217.7 20,312.0 total liabilities 17,387,961 18,658,782 19,763,966 14,918,798 12,678,920 19,814.7 0.0 0.7 (365.2) (57.9) Short-term Debt 1,948,739 3,752,210 6,751,183 5,597,760 4,235,584 -0.3 -1.8 Current Liabilities 12,355,273 12,910,209 13,692,654 10,420,754 9,366,880 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Long-term Debt 4,472,894 6,192,950 5,586,300 3,900,995 2,688,615 total Stockholders’ equity 10,205,198 7,304,094 5,819,584 4,542,204 4,664,019 Net Income Operating Profit Sales by Plants (Unit: KRW in billions) % of Revenue total liabilities & Stockholders’ equity 27,593,159 25,962,876 25,583,550 19,461,002 17,342,939 Summarized income Statement d (KRW in millions) 6.2 c 1,531 Sales Revenue 42,290,340 29,445,206 22,217,661 20,311,996 19,814,690 2,640.7 a.