Samsung Securities evaluated on the 20th that Kia has begun to be affected by the United States' tariff policy. While maintaining a 'buy' investment opinion, it has adjusted the target price down from 130,000 won to 120,000 won.
Lim Eun-young, a research analyst at Samsung Securities, explained that the U.S. tariff began to be reflected in Kia's sales costs since May. The free on board (FOB) price for exports from Korea is $25,000 per unit, and the wholesale selling price in the U.S. market is $35,000. It is estimated that applying a 25% tariff results in a burden of 8 million to 9 million won per unit.
The research analyst noted, "To reduce the impact, Kia has decreased the incentive (a subsidy paid by automobile manufacturers to dealers) from $2,000 to $1,500 since May," adding that "the net impact amounts to 250 billion won a month, or 3 trillion won annually."
This may change depending on the outcome of tariff negotiations in the future. Earlier, Japan pushed for a plan to reduce car tariffs to below 10%, but the U.S. rejected it and is set to enter re-negotiations next month. The research analyst anticipates that Korea will negotiate afterward. Kia plans to decide whether to raise its prices around the end of September by considering the trends of price increases from other companies and the outcomes of tariff negotiations.
The research analyst saw that due to Kia's poor second-quarter performance, the stock price may experience short-term adjustments. Although the impact of tariffs is expected to reduce the profit size, it was evaluated that even if Kia maintains its cash dividend of 6,500 won per share this year, the amount of share buybacks could decrease.
However, the research analyst pointed out that concerns about tariffs have already been significantly reflected in the stock price during the previous sharp drop. He remarked, "As Kia has chosen to pursue a strategy of expanding market share by launching mid-range electric vehicles in the U.S. and European electric vehicle markets, future trends in market share will determine the stock price," and continued, "Even considering the impact of tariffs, Kia has the best profitability among global competitors."