US tariffs dent Hyundai Motor's Q2 earnings despite solid sales

Hyundai Motor Co. on Thursday reported its first double-digit profit fall in five years in the second quarter despite posting record second-quarter sales, hit by the US government's 25% tariffs on foreign-made cars, implemented in April.

“We achieved external growth thanks to increased sales in key markets including Korea, the US and Europe, but profits dropped due to the impact of US tariffs and rising incentives and promotion costs amid intensifying competition,” said a Hyundai official.

Operating profit fell 15.8% on-year to 3.60 trillion won ($2.6 billion) on a consolidated basis, according to its regulatory filing. It marked the first double-digit on-year fall since the third quarter of 2020.

Compared to the first quarter, it inched down 0.9%.

Net profit declined 22.1% on-year to 3.25 trillion won and fell 3.9% from the prior quarter.

However, revenue rose 7.3% on-year to 48.29 trillion won in the April-June quarter, up 8.7% from the first quarter, driven by robust sales in North America. The weaker Korean won raised its price competitiveness.

The South Korean carmakers' sales volume edged up 0.8% on-year to 1.7 million units in the second quarter, including sales of 188,540 units in the domestic market.

Recently, Hyundai and its sibling Kia Corp. slashed prices and rolled out aggressive zero-interest financing to win over US car buyers, taking the opposite approach to that of its rivals, which passed Washington's tariffs on to consumers.

Write to Yeonhee Kim at yhkim@hankyung.com

Jennifer Nicholson-Breen edited this article.