Hyundai Motor posts record Q1 sales, profit despite US tariff woes
Korean automaker launches US trade policy task force, accelerates local parts sourcing efforts
Hyundai Motor Company achieved record-breaking sales and profit for the first quarter amid the deepening concerns over the 25 percent tariffs on automobiles and car parts imposed by Donald Trump.
According to the carmaker's earnings report on Thursday, its sales revenue increased 9.2 percent to 44.4 trillion won ($31.1 billion), while its operating profit climbed 2.1 percent to 3.6 trillion won from January to March compared to last year. Its operating profit margin hit 8.2 percent. Hyundai Motor's first-quarter revenue and profit surpassed the market estimates by 2.2 percent and 2.6 percent, respectively.
'Despite increased industry average incentives in Europe and North America, as well as investments in new models and research and development, Hyundai achieved record-high first-quarter results,' said Lee Seung-jo, head of the finance and planning division of Hyundai Motor Group, during a conference call. 'This was driven by the highest-ever sales of hybrid vehicles, strong performance in the North American market and favorable won-dollar exchange rate.'
The company sold 1 million vehicles worldwide, a 0.6 percent decrease from the previous year, with sales outside Korea declining 1.4 percent to 834,760 units, impacted by unfavorable global market conditions. However, the North American market showed robust sales of 560,000 units.
Global sales of eco-friendly vehicles surged by 38.4 percent compared to last year, reaching a total of 212,426 units, with electric vehicles and hybrids representing 64,091 units and 137,075 units, respectively.
Although the US' 25 percent levies on vehicles and auto parts, which took effect on April 3, have not directly impacted the first quarter earnings, Hyundai Motor pledged to minimize tariff impacts.
'We have established a task force to address US tariff challenges (in mid-April) to optimize our profitability-based operational hubs and actively pursue Capex (Capital Expenditure) and Opex (Operating Expenditure) contingency plans,' said Lee. 'The company is also enhancing production efficiency at our Alabama plant and Hyundai Motor Group Metaplant America in Georgia to reduce costs.'
Hyundai Motor also stressed that it focuses on localizing parts sourcing in the US and is actively vetting new parts suppliers in the region. It identifies fast-track items to accelerate the tariff reduction effect and optimize logistics solutions.
The carmaker will keep the current retail vehicle prices in the US until June 2 by selling off its inventory, after which prices will be determined by market demand.
Although the auto manufacturer committed a $21 billion investment in the US — including $8.6 billion in automotive manufacturing, $6.1 billion in parts, logistics and steel, and $6.3 billion in future industries and energy sectors — 25 percent reciprocal tariffs on imported vehicles and parts was introduced as planned.
In addition, Hyundai Motor plans to actively promote sales of new models such as the All-New Palisade, the All-New Nexo and the New Ioniq 6 while strategically implementing enhanced localization strategies for each market. Hyundai is also committed to maintaining growth momentum by driving innovations and strengthening competitiveness in response to complex business risk factors.
Based on these strategies, the carmaker aims to maintain its annual guidance of 3-4 percent revenue growth and 7-8 percent operating profit growth as announced in January.
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