Hyundai reports 16% drop in profit amid US tariff impact

Hyundai Motor reported a drop in second-quarter operating profits on Thursday. The South Korean carmaker, along with its sister company Kia, is the world’s third-largest automaker in terms of sales volume. However, the impact of U.S. tariffs cost the company $606.37 million, and the automaker’s operating profit dropped by 16% year-over-year to $2.64 billion.

The automaker anticipates a deeper decline in the third quarter if South Korea and the U.S. fail to strike a more favorable trade deal. But, despite the losses, the carmaker will maintain its annual profit guidance and reevaluate on Aug. 1 when reciprocal tariffs take effect.

Here’s why it matters:

Hyundai is South Korea’s most significant automotive player, and its decline underscores the urgency for South Korean and U.S. officials to reach a deal.

Over 40% of the carmaker’s revenue is generated in the U.S., making it a critical market for its success. Hyundai and Kia import roughly two-thirds of the vehicles sold in the U.S. Although the company front-loaded shipments ahead of the tariffs, U.S. inventory levels are now beginning to shrink.

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Key takeaways:

• U.S. tariffs drive Hyundai’s Q2 profit down 16%
  Hyundai’s second-quarter operating profit dropped to $2.64 billion, with U.S. tariffs alone costing the company $606 million.
• The U.S. market is vital to Hyundai’s performance
  Over 40% of Hyundai’s total revenue comes from the U.S., and nearly two-thirds of the vehicles it sells are imports, heightening its exposure to shifts in trade policies.
• Despite losses, Hyundai will hold its annual profit target—for now
  While warning of further impact, Hyundai said it will maintain its full-year profit guidance and will update its outlook after reciprocal tariffs take effect on Aug. 1.
• Hyundai’s retail sales climbed, but inventory is shrinking
  Holding prices steady helped Hyundai boost U.S. retail sales by 10% year-over-year in Q2. However, U.S. inventory is shrinking.
• Investors await progress on U.S.-South Korea trade talks
  Talks scheduled for Friday between South Korean and U.S. officials have been postponed. Hyundai’s stock dipped 2% following the announcement.