Hyundai Motor Co (005380.KS) on Thursday posted a 16% decline in second-quarter operating profit, as newly imposed U.S. tariffs on vehicles and parts weighed on its bottom line. The South Korean automaker warned of a more pronounced impact in the third quarter, citing uncertainty surrounding ongoing trade discussions between Seoul and Washington.
The company reported an operating profit of 3.6 trillion won ($2.64 billion) for the April-to-June period, compared to 4.28 trillion won a year earlier. The result was in line with a 3.5 trillion won SmartEstimate compiled by LSEG from 22 analysts. Revenue rose 7% year-on-year to 48.3 trillion won, exceeding analysts’ expectations of 47 trillion won.
The latest results underline growing challenges for South Korean officials to negotiate a trade resolution, after the United States reached an agreement with Japan this week to reduce tariffs on Japanese auto imports to 15%. Hyundai said U.S. tariffs cost the company 828 billion won ($606 million) in the second quarter, with higher costs anticipated between July and September.
“We expect U.S. tariff rates on Korean autos to go down a little from the current 25%, but it is difficult to predict by how much,” said Hyundai Motor Chief Financial Officer Lee Seung-jo.
The South Korean automaker, which with affiliate Kia Corp (000270.KS) ranks as the world’s third-largest automotive group by sales, said it would maintain its full-year profit guidance for now but may revise it after the August 1 deadline when reciprocal tariffs could take effect.
In a bid to soften the blow from tariffs, Hyundai front-loaded vehicle shipments to the U.S., boosting retail sales in the second quarter by 10% compared to a year earlier. However, analysts noted that U.S. inventories are depleting. The company said it would continue to absorb additional costs for now and adjust vehicle prices in the U.S. based on market conditions and competitor moves rather than directly responding to tariffs.
Hyundai also said it is exploring alternative parts sourcing and is reviewing longer-term plans to expand local vehicle production in North America.
The automaker’s stock fell 2% following the earnings announcement.
“It seems crucial for Hyundai Motor to reassure investors on whether it has effective tools to navigate ongoing tariff-related uncertainty, or how it plans to contribute to broader South Korea-U.S. 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.”
Other automakers, including General Motors, Stellantis, and Tesla, have also reported financial pressure from U.S. tariffs, which have increased costs on imported vehicles, components, steel, and aluminum.
While Hyundai acknowledged the pressure, it noted that a weaker South Korean won helped offset some of the impact in the second quarter.
South Korea’s finance ministry said a planned meeting between top U.S. and South Korean officials to discuss trade concerns has been postponed due to scheduling issues for U.S. Treasury Secretary Scott Bessent.
Hyundai’s results come at a time when the automaker’s share of the U.S. market has been growing, with nearly two-thirds of Hyundai and Kia vehicles sold in the U.S. still imported. The company’s efforts to navigate the evolving trade environment may prove critical in maintaining its position in a key global market.