Seoul — Hyundai Motor posted a decline in second-quarter operating profit on Thursday and warned of a bigger impact in the current quarter as US tariffs on vehicles and parts started to weigh on its bottom line.
Hyundai’s results highlight 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 takes effect.
Hyundai, which together with affiliate Kia is the world’s third-biggest carmaker by sales, booked an operating profit of 3.6-trillion won ($2.64bn) for the April-to-June period, down 16% from the same period a year earlier. An LSEG SmartEstimate drawn from 22 analysts had forecast an operating profit of 3.5-trillion won .
The South Korean automaker said US tariffs cost it 828-billion won in the second quarter, and the impact will be larger in the July to September period.
Hyundai expected US tariff rates on Korean autos to “go down a little” from 25% now, but it is hard to predict how much it would drop, said CFO Lee Seung-jo.
South Korean companies after on tenterhooks since Washington reached a deal with Japan this week that lowers tariffs on auto imports to 15% 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 officials from both countries over tariffs have been rescheduled because of a scheduling conflict for US treasury secretary Scott Bessent.
The automaker’s shares fell 2% after the earnings announcement.
Reassurance required
“It seems crucial for Hyundai Motor to reassure investors whether it has effective tools to navigate ongoing tariff-related uncertainty, or how it plans to contribute to broader South Korea-US 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.”
The earnings offer the first look at how the Korean automaker, which has gained market share and sales in the US in recent years, is taking the impact of the tariffs in a lucrative market.
Hyundai Motor generates more than 40% of its revenue in the US. Together with Kia, it imports about two-thirds of its vehicles sold in the US.
Hyundai Motor front-loaded shipments to cushion the blow from the tariffs, but its US inventory is depleting, analysts said. The company increased US retail sales in the second quarter, rising by 10% from a year earlier as the automaker kept prices unchanged and absorbed higher costs.
Hyundai said it will flexibly adjust US vehicle prices based on market conditions and competitors rather than US 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 US levies — not only on vehicle imports, but also automotive parts, as well as steel and aluminium.
While US tariffs pose risks to its operations, the weaker South Korean currency helped cushion some of the blow from the tariffs, Hyundai said.
The company said revenue rose 7% from a year earlier to 48.3-trillion won, versus the analysts’ consensus of 47-trillion won. Reuters
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