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Hyundai Motor profit down 16% despite $21 billion investment pledge

Published: 24 Jul. 2025, 18:27

Export-bound cars are lined up at Pyeongtaek Port in Gyeonggi on July 24. [YONHAP]

Hyundai Motor's second quarter profit dropped nearly 16 percent, despite record-breaking sales, as new U.S. tariffs on imported cars took a toll on the automaker’s bottom line.

The company had hoped to sidestep the impact of the Donald Trump administration’s 25 percent tariff on imported vehicles, which took effect in April, but its efforts — including a $21 billion investment pledge announced in March — were not enough to shield its earnings.

With trade negotiations between Seoul and Washington stalled, Hyundai now finds itself at a competitive disadvantage against automakers based in Japan, which recently secured a tariff reduction.

In a regulatory filing on Thursday, Hyundai reported consolidated revenue of 48.29 trillion won ($35.27 billion) for the April–June period, up 7.3 percent from a year earlier. Operating profit, however, fell 15.8 percent to 3.1 trillion won.

“Although sales volume grew across key markets like Korea, the United States and Europe, profitability weakened due to the U.S. tariff impact, intensified global competition, and higher incentives and sales-related expenses,” a Hyundai spokesperson said.

Hyundai Motor Group Executive Chair Euisun Chung delivers remarks as U.S. President Donald Trump, second from right, stand in the Roosevelt Room at the White House in Washington on March 24. [AP/YONHAP]

Hyundai credited the record revenue to strong demand for its environmentally friendly vehicles, better performance by its financial services division and favorable exchange rates. Sales of hybrid and electric vehicles jumped 36.4 percent to 262,126 units in the second quarter. Of those, 78,802 were fully electric vehicles and 168,703 were hybrids.

Global vehicle sales rose 0.8 percent to 1.07 million units. In Korea, new models like the Palisade and Ioniq 9 helped boost domestic sales by 1.5 percent to 188,540 units. Overseas sales grew 0.7 percent to 877,296 units, supported by strong demand for hybrids and SUVs, particularly in the United States and Europe.

U.S.–Japan deal escalates pressure

Tariffs remain the most pressing risk for Hyundai in the second half of 2025. A recent agreement between the United States and Japan to lower the tariff on Japanese vehicles to 15 percent further threatens Hyundai’s competitive standing in the world’s largest car market.

If Korea fails to reach a similar deal with Washington, Hyundai vehicles will continue to face a 25 percent tariff — 10 percentage points higher than Japanese rivals. With Hyundai locked in a fierce battle with Toyota in the U.S. market, that gap could prove critical.

In response, Hyundai has opted not to raise U.S. sticker prices for now, choosing instead to absorb the added costs.

Export-bound cars are parked at Pyeongtaek Port in Gyeonggi on July 7. [NEWS1]

On its earnings call, the company revealed that “tariff-related losses exceeded 800 billion won in the second quarter” and warned that “the damage in the third quarter could surpass 1 trillion won.”

Lee Seung-jo, executive vice president and head of the company's finance division, said Hyundai would take a flexible approach. “Rather than trying to lead on price, we will closely monitor market conditions and respond accordingly. Our goal is to defend market share while maintaining profitability.”

To cushion the blow, Hyundai plans to localize more parts production and expand U.S. manufacturing. It is also working to reduce materials and processing costs. A dedicated task force has been launched to speed up the parts localization drive.

Hyundai is not alone. Major automakers around the world also felt the sting of the new tariff regime in the second quarter.

General Motors reported a 1.7 percent dip in revenue to $47.1 billion and a 35 percent fall in net income to $1.9 billion. Tesla posted its weakest quarterly results in a decade, with revenue dropping 12 percent to $22.5 billion and operating profit down 42 percent to $923 million — nearly half what it was a year ago.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK YOUNG-WOO [[email protected]]