Hyundai posted a modest 0.2% rise in net profit to $2.37 billion for the first quarter of 2025, surpassing analyst expectations despite ongoing challenges in the global automotive market. The growth was primarily driven by strong sales of hybrid electric vehicles (EVs), particularly in the U.S., and a favorable exchange rate with the strong dollar. However, the South Korean automaker faces significant headwinds, particularly from the 25% tariff on imported vehicles and auto parts imposed by the Trump administration.
The company’s first-quarter performance was a mixed result, with sluggish global vehicle demand offset by robust sales in the U.S. market. Hyundai’s wholesale car sales fell by 0.6% globally, but retail sales in the U.S. grew by 11%, marking it as a key area of growth. Despite the decline in overall sales, higher-margin hybrid EV models have helped bolster Hyundai’s earnings, as U.S. consumers continue to show interest in these vehicles.
Hyundai executives noted that the company proactively increased shipments in anticipation of higher tariffs. This strategy allowed the automaker to stockpile enough vehicles and parts for over three months of operations in the U.S., which may help reduce the immediate impact of the tariff hikes. Nonetheless, the looming 25% levy on auto parts is expected to place additional strain on Hyundai’s profitability, especially as the U.S. remains one of its most important markets, contributing about 25% of its global sales.
The South Korean government has responded by introducing a multibillion-dollar aid package aimed at supporting its auto sector, which could be significantly affected by these tariffs. In 2024, South Korea exported $35 billion worth of cars to the U.S., accounting for nearly half of its total automotive exports. Early trade data for April have shown a decline in overall exports, with a particular downturn in car shipments to the U.S., signaling the broader impact of the new tariffs.
While Hyundai’s immediate financial results have been steady, analysts warn that the ongoing trade tensions and tariffs could weigh on its future earnings, particularly as it faces rising costs from the duties on imported vehicles and parts. As the company adapts to these challenges, it remains to be seen how Hyundai and other automakers will navigate these turbulent conditions in the months ahead.
