Seoul, April 23
Local industry leaders Hyundai Motor and Kia are expected to report increased sales but with shrinking operating profits in their first-quarter earnings results scheduled to be announced this week, a market analysis showed on Wednesday.
According to the analysis of earnings forecasts from securities firms compiled by Yonhap Infomax over the past three months, Hyundai Motor is estimated to report sales of 43.44 trillion won (US$30.4 billion) for the January-March period and an operating profit of 3.54 trillion won in its earnings report set to be released on Thursday.
While sales would mark a 6.8 percent increase, operating profit is projected to dip by 0.4 percent, reports Yonhap news agency.
Its sister Kia is estimated to report 27.81 trillion won in sales and 3.23 trillion won in operating profit, which would mark a 6.1 percent on-year growth and a 5.8 percent decline, respectively, on Friday.
The forecasts come amid growing concerns over the impact of the Donald Trump administration's new 25 percent tariffs imposed on all automobile and auto parts imports since April 3.
While South Korea's two leading automakers are reportedly cushioning the blow with existing vehicle inventories, market watchers warn that profitability will likely come under increasing pressure in the coming months.
KB Securities has warned that the U.S. tariff could eventually cut 3.4 trillion won from Hyundai's annual operating profit and 2.3 trillion won from Kia's.
To mitigate tariff-related risks, Hyundai Motor Group plans to ramp up its U.S. production capacity to 1.2 million units per year by expanding output at its Alabama and Georgia plants, as well as the new Hyundai Motor Group Metaplant America electric vehicle (EV) plant also located in Georgia.
It has also decided to freeze the prices of all new vehicles sold in the U.S. through early June, a move aimed at easing consumer concerns over rising costs.
—IANS
— IANS
Reader Comments
Interesting analysis! The tariffs are definitely going to hurt, but I'm glad Hyundai is being proactive with their US production expansion. EVs seem like the smart play here. 🚗⚡
I own a Hyundai and love it, but I'm concerned about how these tariffs might affect future prices. The temporary price freeze is nice, but what happens after June?
Respectful criticism here: The article could have included more context about how these tariffs compare to previous years. Are we seeing a pattern or is this unprecedented?
Those profit loss projections are staggering! 3.4 trillion won is no joke. Makes me wonder if other automakers are facing similar challenges or if this is unique to Korean brands.
The Georgia EV plant is a game changer. Smart move to focus on domestic production for the US market. Maybe this short-term pain will lead to long-term gains.
Sales up but profits down... classic case of growth vs profitability. Hope they find the right balance soon. Their cars are too good to suffer long-term setbacks!
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.