How Trump's auto tariffs could pump the brakes on Hyundai's Genesis

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How Trump's auto tariffs could pump the brakes on Hyundai's Genesis

Published: 17 Mar. 2025, 19:11 Updated: 17 Mar. 2025, 19:14

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

A white Genesis GV80 SUV is parked next to Ivanka Trump as she walks to board a plane to Washington for U.S. President Donald Trump's inauguration in West Palm Beach on Jan. 18. [REUTERS/YONHAP]

[NEWS IN FOCUS]

With Washington’s jolt for at least 25 percent auto tariffs showing no sign of slowing down, the trade war salvo will likely put brakes on Hyundai Motor’s accelerating growth in the U.S. market driven by high-margin Genesis-branded cars.

Trade Minister Cheong In-kyo predicted Sunday that Trump’s “tariffs will be imposed as planned on April 2" after his two-day trip to the United States for negotiation, blasting local carmakers' hopes for Korea’s exemption from the policy. Trump also publicly clarified his intention, saying, “They charge us, and we charge them, and then, in addition to that, on auto, on steel, on aluminum, we are going to have additional tariffs.”

Genesis, Hyundai’s stand-alone luxury brand, is likely to be hit hardest by the tariff jerk as more than 70 percent of its vehicles in the U.S. market were produced in Korea. The production ramp-up is also subject to union ratification, which may take at least a few years.

Only 24,000 of the 75,003 Genesis units sold in the United States last year were produced locally.

Genesis sales are constantly escalating in the United States, standing at 75,003 units in 2024, a 358 percent jump from 2020, according to the company’s latest regulatory filing. That means one out of three Genesis vehicles were sold in the U.S. market, while February sales reached a fresh record high of 5,546.

The surprising sales record came in line with Hyundai’s increasing profit margins overseas. The average cost of Hyundai’s passenger car, which also includes sedans and SUVs, was roughly 69 million won ($47,700), up 9.7 percent on year. Compared to 2022, it’s a 36.8 percent jump.

Genesis cars are displayed at the 2024 Los Angeles Auto Show on Nov. 22, 2024, in Los Angeles. [YONHAP]

The GV70 SUVs are currently the only Genesis model that is made in Hyundai’s Alabama plant, but its sales made up only 4 percent, or 2,976, of the premium brand’s total sales in the U.S. market.

“The U.S. market is where Hyundai shows the highest profitability. Thus, its dependence is growing, driven by the high average selling price of Genesis cars and big SUVs,” said researcher Esther Lim of Samsung Securities. “In terms of sales, the U.S. market accounts for 45 percent of its total while, in terms of profit, it takes up to 70 percent.”

SK Securities estimated that with the 25 percent tariffs on automobiles, Hyundai will suffer a 6.6 trillion won cut in operating profit while Kia’s profit is slashed by 4.1 trillion won.

Genesis is rushing to boost its U.S. production capacity with the mass production of Hyundai’s $5.5 billion manufacturing plant in Georgia scheduled for the end of March. Genesis cars will also be produced at the factory, though the specific details of which Genesis models have not been decided.

Genesis GV70s are displayed at a media event in Yongin, Gyeonggi, on May 18, 2024. [YONHAP]

Kia also hinted that it would increase U.S. capacity ahead of Trump’s warned 25 percent auto tariff on top of an additional reciprocal tariff.

“We are doing what we believe is right for Kia, and that means building as many cars as possible here,” said Steven Center, chief operating officer and executive vice president at Kia America, during an interview with Yahoo Finance. “We're going to be building EVs in Georgia, and that's before any of this tariff talk.”

The Georgia plant will have 300,000 units of capacity, which will later be raised to 500,000, making the automaker’s total volume some 1.2 million units.

BY SARAH CHEA [[email protected]]