Hyundai Motor warns of bigger hit from US tariffs after Q2 profit fall

Time of India

25-07-2025

Hyundai Motor
posted a decline in second-quarter operating profit on Thursday as U.S. tariffs on vehicles and parts started to weigh on its bottom line and warned of a bigger impact in the current quarter.
Hyundai's results illustrate the stakes for South Korean officials, who are under pressure to come up with a trade deal after Washington and Tokyo reached an agreement this week that will cut tariffs on its Japanese rivals.
The South Korean automaker said it was sticking to its annual profit target for now, but it will update the plan after the August 1 deadline for reciprocal tariffs to take effect.
Hyundai, which together with affiliate
Kia
is the world's third-biggest automaking group by sales, booked operating profit of 3.6 trillion won ($2.64 billion) for the April-to-June period, down 16 per cent from 4.28 trillion won in the same period a year earlier. The result is compared to a 3.5 trillion won LSEG SmartEstimate drawn from 22 analysts.
The South Korean automaker said U.S. tariffs cost the company 828 billion won ($606.37 million) in the second quarter, and the impact will be larger in the July to September period.
Hyundai expected U.S. tariff rates on Korean autos to "go down a little" from the current 25 per cent, but it is hard to predict how much it would drop, said Hyundai Motor Chief Finance Officer Lee Seung-jo.
South Korean companies have been on tenterhooks after Washington reached a deal with Japan this week that lowers tariffs on auto imports to 15 per cent and spares Tokyo from punishing new levies on other goods.
South Korea's finance ministry said on Thursday that talks due to be held on Friday between top Seoul and Washington officials over tariffs have been rescheduled because of a scheduling conflict for U.S. Treasury Secretary Scott Bessent.
The automaker's shares fell 2 per cent after the earnings announcement.
"It seems crucial for Hyundai Motor to reassure investors on whether it has effective tools to navigate ongoing tariff-related uncertainty, or how it plans to contribute to broader South Korea-U.S. trade discussions," said Shin Yoon-chul, an analyst at Kiwoom Securities.
"Yet, as with its first-quarter results, the company remained silent - a stance that is likely to leave foreign investors uneasy about investing in Hyundai."
Vehicle pricing
The earnings offer the first look at how the Korean automaker, which has gained market share and sales in the U.S. in recent years, is taking the impact of the tariffs in a lucrative market.
Hyundai Motor generates over 40 per cent of its revenue in the U.S. market. Together with Kia, Hyundai Motor imports about two-thirds of its vehicles sold in the United States.
Hyundai Motor front-loaded shipments to cushion the blow from the tariffs, but its U.S. inventory is drying up, analysts said. Hyundai Motor increased U.S. retail sales in the second quarter, rising by 10 per cent from a year earlier, as the automaker kept prices unchanged and absorbed higher costs.
Hyundai said it will flexibly adjust U.S. vehicle prices based on market conditions and competitors rather than U.S. tariffs. The automaker also seeks to pursue alternative sourcing of parts, while closely reviewing the expansion of local vehicle production for the longer term.
GM, Stellantis, and Tesla this week reported financial hits from the tariffs as automakers grapple with rising import and manufacturing costs from U.S. levies on not only vehicle imports, but also automotive parts, as well as steel and aluminum.
While U.S. tariffs pose risks to its operations, the weaker South Korean currency helped cushion some of the blow from the tariffs, Hyundai said.
Hyundai Motor said its revenue rose 7 per cent from a year earlier to 48.3 trillion won, versus the analysts' consensus of 47 trillion won.