This year, Hyundai Motor Group's operating profit is expected to decrease compared to last year. Despite Hyundai Motor and Kia setting record-high sales in the first half of the year in the U.S., which they are heavily reliant on, a decline in profit is anticipated due to a 25% tariff and the early termination of the electric vehicle tax credit. Hyundai Motor Group is expected to focus on hybrid vehicles to defend its position in the U.S. market.
According to financial information company FnGuide on the 8th, the estimated second-quarter operating profits for Hyundai Motor and Kia in the securities sector are 3.6292 trillion won and 3.1286 trillion won, respectively. These figures represent a decrease of 32.1% and 14.1% year-on-year. Hyundai Motor's operating profit forecast for this year is 13.1444 trillion won, down 7.7% from last year, while Kia's is projected to decrease by 10.3% to 11.3672 trillion won. If this year's operating profits meet expectations, Hyundai Motor will see a second consecutive decline for two years, and Kia will experience a decrease for the first time in eight years.
In the first half of the year, Hyundai Motor and Kia's total sales in the U.S. reached 893,152 units, a 9.2% increase compared to the same period last year. This record is the highest ever for the first half of the year. However, if the impact of tariffs intensifies, a slowdown in sales is expected. Hyundai Motor Group has an import ratio of 65% in its U.S. sales and has not yet raised prices even after tariffs were imposed in April. Hanwha Investment & Securities estimated that Hyundai Motor would bear a tariff burden of 2.6 trillion won and Kia would face a burden of 2.3 trillion won this year.
The decline in the won-dollar exchange rate is also expected to affect Hyundai Motor Group's revenue. As the value of the dollar decreases and the won strengthens, the price competitiveness of cars leaving Korea is inevitably reduced.
The termination of the U.S. electric vehicle tax credit is also a negative factor. The 'One Big Beautiful Bill Act (OBBBA)', which passed the U.S. House on the 3rd (local time), includes provisions to end the maximum $7,500 (about 10 million won) tax credit for purchasing electric vehicles that meet American origin requirements on September 30.
Hyundai Motor Group sold about 120,000 electric vehicles in the U.S. last year, ranking second in market share after Tesla. Assuming these vehicles received the full $7,500 tax benefit, a total of $900 million (approximately 1.23 trillion won) in benefits for Hyundai Motor and Kia customers would be lost.
An industry source noted, "It appears that they will have no choice but to focus on local production and sales of hybrid cars, which are more favored by American consumers."