On the Dash:
- U.S. tariffs cost Kia $842 million in Q3, driving a 49% decline in profit despite record revenue.
- The company expects a similar hit in Q4 but anticipates relief once the lower 15% duties take effect in December.
- Kia projects a recovery fueled by new EV launches and steady demand in North America and Europe.
Kia reported that the U.S. tariffs cost the company 1.2 trillion won ($842 million) in the third quarter, slashing its operating profit by nearly half despite record vehicle sales and revenue.
The South Korean automaker reported a 49% drop in operating profit to 1.5 trillion won ($1.05 billion), falling short of analysts’ estimates compiled by Bloomberg. Even with the decline, Kia achieved its highest-ever third-quarter revenue and record wholesale deliveries of 785,137 vehicles, fueled by global demand for electric and hybrid models.
Kia expects the same 1.2 trillion won tariff impact in the fourth quarter, even after the U.S. and South Korea finalized a deal to lower import duties from 25% to 15%. Chief Financial Officer Kim Seung Jun said the benefit won’t be felt until December because existing U.S. inventory has already been taxed at the higher rate.
However, the automaker’s affiliate, Hyundai, also reported steep losses from U.S. tariffs, totaling 1.8 trillion won ($1.26 billion) in the same period. The tariff costs have underscored the financial strain facing South Korean manufacturers despite a clearer trade outlook.
Increased warranty expenses, a weaker won, new vehicle launch costs, and growing competition from Chinese automakers further pressured Kia’s results. The company, however, said profits have “bottomed out” and expects a turnaround beginning in the fourth quarter.
Meanwhile, strong demand in North America and Europe, along with the introduction of new EV models such as the EV4 and EV2, is expected to support the recovery. Kia and Hyundai continue to expand production at U.S. facilities in Alabama and Georgia while growing their hybrid and EV lineups in key global markets, including Europe, India, and China.
