Kia takes $570m hit from US tariffs in second quarter
Kia, the world's No3 carmaker with affiliate Hyundai Motor, said its operating profit slumped 24% to 2.76-trillion won (R35.39bn) in the second quarter from a year earlier.
Kia increased US sales by 5% as consumers brought forward car purchases due to concerns that US tariffs would lead to higher vehicle prices. It also had solid sales of its new Carnival hybrid SUV in the second quarter.
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TimesLIVE
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Kia takes $570m hit from US tariffs in second quarter
South Korea's Kia said on Friday it suffered a hit of 786bn won (about R10.07bn) from US tariffs in the April to June period. Kia, the world's No3 carmaker with affiliate Hyundai Motor, said its operating profit slumped 24% to 2.76-trillion won (R35.39bn) in the second quarter from a year earlier. Kia increased US sales by 5% as consumers brought forward car purchases due to concerns that US tariffs would lead to higher vehicle prices. It also had solid sales of its new Carnival hybrid SUV in the second quarter.
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The Herald
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Why Asian carmakers are staying loyal to the US market despite trade friction
The US is Toyota's biggest market in terms of vehicles. It sold 2.3-million vehicles there in 2024, including its Lexus brand, accounting for more than a fifth of its global total. As a source of revenue, North America was second only to Japan in the past financial year. Hyundai's North American revenue was the highest in almost a decade last year. Kim Chang-ho, an analyst at Korea Investment & Securities, estimated it generates about 60% of its profits from the US, thanks to higher vehicle prices. Mocked in the US in the 1980s for its perceived shoddy quality, Hyundai doubled down there about a decade ago, especially after tensions between Beijing and Seoul and the rise of domestic EV makers saw it start to lose ground in China. 'After years of putting in effort, our brand is gaining recognition in the US,' one of the Hyundai insiders said. 'So we will not take our hands off the US.' The US has seen a surge in demand for hybrids as consumers have become more concerned about the battery range, price and charging hassles of EVs. Fuel-efficient models such as hybrids will be a key driver to gaining market share, said Morningstar analyst Vincent Sun. Toyota, Hyundai and Kia have particularly strong hybrid offerings. So far, most legacy Asian carmakers have avoided raising prices in the US and stronger players are likely to continue to hold off doing so, despite lower profitability, analysts said. Instead, the focus will probably be on taking market share from lower margin rivals such as Nissan and Stellantis, analysts said. 'It will shape up like a game of chicken,' said Kim Sung-rae, an analyst at Hanwha Investment & Securities. 'Those who will hold up well will emerge as winners.' Over time, tariffs could be a catalyst to help drive consolidation in the industry, or at least deepen existing tie-ups. Investors wonder if tariffs could push Nissan to revive merger talks with Honda that fell apart this year. Mazda, which is 5.1% owned by Toyota, and Subaru, which is 21% owned by Toyota, could become more reliant on the bigger company.
