Hyundai Motor retains earnings targets after US tariffs hit Q3 profit

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By Heekyong Yang and Hyunjoo Jin

SEOUL (Reuters) -South Korea’s Hyundai Motor posted a 29% decline in third-quarter operating profit on Thursday as U.S. tariffs weighed, but said it would maintain full-year targets after Seoul and Washington reached a trade deal.

The U.S. is Hyundai’s largest market and generates about 40% of revenue. The automaker’s vehicles have been subject to a tariff of 25% since April.

On Wednesday, U.S. President Donald Trump and his South Korean counterpart Lee Jae Myung agreed a deal that would see the rate come down to 15%.

Hyundai, which together with its affiliate Kia is the world’s third-biggest automaking group by sales, said it would stick to its revenue and profit margin target for the year.

The company booked an operating profit of 2.5 trillion won ($1.76 billion) for the July-September period, down from 3.6 trillion won a year earlier.

The earnings were in line with the 2.5 trillion won from LSEG SmartEstimate, which is weighted towards analysts who are more consistently accurate.

The automaker said U.S. tariffs cost the company 1.8 trillion won in the third quarter, up from 828 billion won in the previous quarter.

“Changes in the trade environment, including tariffs, would impact our profits and are a major risk factor for future business operations,” Hyundai said in a statement. It also forecast a continued slowdown in sales in emerging markets.

The group, which also includes affiliate Hyundai Mobis, welcomed Wednesday’s trade breakthrough.

The South Korea-U.S. deal has “resolved all of the uncertainty” over automobile tariffs, a Hyundai executive told reporters during a call on Thursday.

Hyundai Motor said its revenue rose 8.8% from a year earlier to 46.7 trillion won, versus an analysts’ consensus of 45.8 trillion won.

Hyundai Motor shares, which rallied earlier after the trade deal, pared gains, and closed up 2.7% in Seoul.

Despite the U.S. tariffs, Hyundai’s U.S. retail sales jumped 12.7% from a year earlier as the company focused on electric vehicles, which benefited from a tax break that expired at the end of September, and high-margin models. Hybrid vehicles accounted for 20% of total U.S. sales, Hyundai said, the highest ever.

In Europe, Hyundai’s sales increased 3.2% year-on-year, driven by eco-friendly vehicles. Green-energy vehicles, including battery-powered and hydrogen cars, accounted for 49% of Hyundai’s total sales in the bloc.

The firm is aiming to increase sales of hybrids and its luxury Genesis sedan for 2026, an executive said. The carmaker also said it is considering producing a Genesis hybrid at its plants in the U.S.

Demand for pure battery vehicles may be able to recover sometime after 2030, Hyundai said, without elaborating.

(Reporting by Heekyong Yang, Hyunjoo Jin and Heejin Kim; Editing by Rashmi Aich, Christopher Cushing and Kate Mayberry)