[Special Report] Trump Auto Tariff Bombshell... Hyundai Motor and Kia Weaken for Second Day

Due to the anticipated tariffs on imported cars by the Donald Trump administration, automotive-related stocks such as Hyundai Motor and Kia have continued to decline for two consecutive days in the domestic stock market on the 28th.

As of 10:45 a.m. on the same day, Hyundai Motor was trading at 204,500 KRW per share, down 3.76% from the previous close. Kia also moved down 2.25% to 95,700 KRW. Both Hyundai Motor and Kia had recorded declines of 3-4% the previous day. Related stocks expected to be affected by the tariffs, such as Nexen Tire (-2.51%), Hanon Systems (-1.04%), and Kumho Tire (-0.62%), also showed a downward trend.

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This is analyzed as a continued effect following President Trump’s official announcement of a 25% tariff on all imported automobiles and key parts. Jang Moon-soo, a researcher at Hyundai Motor Securities, conveyed the atmosphere, saying, "Contrary to market expectations that the tariff uncertainty on Korean cars would decrease after Hyundai Motor Group’s investment announcement at the White House, this tariff announcement has further amplified concerns about geopolitical uncertainties surrounding the automotive industry." The day before, Korea Investment & Securities had identified Nexen Tire, Hanon Systems, Kumho Tire, Hyundai Wia, Hyundai Motor, Kia, Hankook Tire, HL Mando, and Hyundai Mobis as the companies whose profitability would decline the most under the worst-case scenario assumption (15% tariff on Korean products, 25% on Mexican products).

Song Seon-jae, a researcher at Hana Securities, stated in a report on the same day, "Korean automakers cannot avoid negative impacts," and assessed, "There will be negative effects in terms of volume and profits during the process of imposing tariffs by the U.S." He pointed out that 35% of Korean automobile production in 2024 is exported to the U.S. and estimated, "With an average export price of $23,000, if a 25% tariff is imposed based on this and the cost cannot be passed on to the selling price, the entire amount would have to be absorbed as a cost, resulting in an estimated profit decrease of about 8 million KRW per vehicle." However, Song also noted that the automotive tariff issue has already been largely reflected in domestic stock prices. Accordingly, he maintained a ‘Buy’ investment rating for Hyundai Motor, Kia, and Hyundai Mobis.

Kang Sung-jin, a researcher at KB Securities, said, "U.S. automotive tariffs are negative for stock prices," but also highlighted, "For companies localized in the U.S., the benefit from price increases could outweigh the tariff burden." He analyzed, "Hyundai Motor Group can reduce related damages and gain benefits by increasing production at HMGMA (Hyundai Motor Group Meta Plant America)." He added, "As HMGMA’s production volume increases, the damage will decrease. If HMGMA’s production reaches 500,000 units, tariffs could even be advantageous." HMGMA is Hyundai Motor Group’s strategic production base in the U.S. and a key hub for the $20.1 billion investment in the U.S. announced by Hyundai Motor Group Chairman Chung Eui-sun during his meeting with President Trump.