Hyundai Motor and Kia Barely Reach 4 Trillion Won in Combined Operating Profit... 3 Trillion Won Lost to Tariffs (Update)

Hyundai: 1.8 Trillion Won Loss, Kia: 1.2 Trillion Won Decrease
Combined Operating Profit Barely Reaches 4 Trillion Won for Q1?Q3

Hyundai Motor Company and Kia saw their operating profit drop by more than 3 trillion won in the third quarter of this year due to the impact of U.S. tariffs.

On October 31, Kia announced that its consolidated operating profit for the third quarter of this year was 1.4622 trillion won, a decrease of 49.2% compared to the same period last year.

Kia explained, "The application of a 25% U.S. tariff reduced profits by 1.234 trillion won," and added, "If the impact of tariffs is excluded, the cost-to-sales ratio for the third quarter would have been 76.8%, maintaining the same level as the third quarter of last year."

However, the company stated, "The impact of tariffs in the fourth quarter will not differ significantly from the third quarter," and explained, "Even if the 15% tariff is retroactively applied starting November 1, the existing inventory in the U.S. has already been subject to the 25% tariff."

The company further explained, "The portion that will actually be affected by the reduced tariff will be sales in December," adding, "Therefore, there will be no significant difference compared to the third quarter. Naturally, the tariff cost itself will decrease, but the gap will not be large." It also stated, "Starting next year, as the 15% tariff is applied, there will be a gradual easing of the burden."

On the other hand, sales revenue reached 28.6861 trillion won, an 8.2% increase compared to the same period last year, marking the highest quarterly sales in the company’s history.

In its earnings announcement the previous day, Hyundai Motor Company also stated, "Due to the impact of tariffs in the third quarter, we incurred an operating loss of 1.8 trillion won," and added, "We were able to offset some of the tariff impact through proactive implementation of contingency plans."

With the South Korean and U.S. governments agreeing to lower automobile tariffs from 25% to 15%, the tariff reduction is expected to take effect as early as next month. As a result, Hyundai Motor Company and Kia have secured a foundation to compete with Japanese and European brands on equal terms in the U.S. market.

According to Hana Securities, if U.S. tariffs are reduced, the annual operating profit reduction for Hyundai Motor Company and Kia is expected to improve by 4.3 trillion won, from the previous 10.6 trillion won to 6.3 trillion won. Hyundai Motor Company stated, "The resolution of tariff negotiations has eliminated uncertainty and enabled more predictable business operations, which is a positive effect beyond the monetary aspect."

Meanwhile, the combined sales revenue of Hyundai Motor Company and Kia for the third quarter of this year was 75.4075 trillion won, and their combined operating profit was 3.9995 trillion won. The combined operating margin was 5.3%. Compared to the third quarter of last year, combined sales increased by 8.6%, while operating profit decreased by 37.4%. Cumulative sales and operating profit for the first to third quarters were 225.4691 trillion won and 17.0081 trillion won, respectively.