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Photo = Hyundai Motor Group |
[Alpha Biz= Kim Jisun] Seoul, October 12 — The profit outlook for Hyundai Motor and Kia continues to darken, with analysts expecting a sharper decline in third-quarter operating income as the impact of U.S. import tariffs intensifies. Industry projections suggest combined tariff-related losses could soar to ₩2.5 trillion (approx. US$1.8 billion) in Q3 — nearly ₩1 trillion more than in the previous quarter.
According to estimates from brokerage and auto industry sources, Hyundai’s tariff losses are expected to range between ₩1.25 trillion and ₩1.5 trillion, while Kia’s will likely reach ₩1.09 trillion to ₩1.23 trillion, for a combined total of ₩2.34 trillion to ₩2.73 trillion. In contrast, Q2 losses totaled about ₩1.61 trillion (₩828.2 billion for Hyundai and ₩786 billion for Kia).
The steep rise reflects the continued enforcement of the 25% U.S. auto import tariff, as negotiations between Seoul and Washington remain stalled. While both automakers had temporarily offset some of the burden in Q2 through inventory reserves and local production, the effect has now worn off — leaving them fully exposed to the tariff’s cost pressure in Q3.
Hanwha Investment & Securities noted that “in Q2, only about 35% of U.S. sales volume was subject to tariffs thanks to pre-tariff inventory,” but the figure likely jumped to over 60% in Q3, leading to estimated profit erosion of around ₩2.7 trillion across both companies.
This loss represents approximately 3.7% of projected Q3 sales and over 40% of operating profit before tariffs. Analysts warn that even if sales revenue grows, profitability will deteriorate further.
Looking ahead, if the 25% tariff remains in place through 2025, Hyundai and Kia’s combined tariff burden could exceed ₩9 trillion annually, potentially slicing around 30% off their expected operating profits.
Hana Securities forecasts Q3 operating profit of ₩2.53 trillion for Hyundai and ₩2.35 trillion for Kia — both below market consensus — while NH Investment & Securities estimates tariff impacts of ₩1.3 trillion and ₩1.2 trillion, respectively.
Despite strong global sales momentum, profitability is being weighed down heavily by tariff costs. Hyundai’s Q3 operating profit is expected to plunge more than 32% year-on-year, falling to the ₩2.4 trillion range, underscoring how sustained trade friction with the U.S. has become a major drag on Korea’s auto exports.
알파경제 Kim Jisun (stockmk2020@alphabiz.co.kr)
