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Kia, Hyundai Mobis's Q1 sales hit record amid EV demand surge but margins and tariffs cloud outlook

Published: 25 Apr. 2025, 19:03 Updated: 25 Apr. 2025, 19:58

Kia and Hyundai Motor's headquarters in Seocho District, southern Seoul are pictured on Jan. 25, 2024. [YONHAP]

Kia posted its highest-ever first-quarter sales, helping propel the combined revenue of parent company Hyundai Motor and Kia past 70 trillion won ($49 billion) for the first time in a single quarter. Hyundai Mobis, an auto parts affiliate, also achieved record-breaking earnings, driven by strong vehicle sales.

The group now faces the challenge of navigating newly imposed U.S. auto tariffs in the second quarter and is adjusting its production system to minimize the potential impact.

Kia logs all-time high Q1 revenue, but margins slip

Kia announced a consolidated revenue of 28.02 trillion won and operating profit of 3.01 trillion won for the January-March period on Friday. Sales rose 6.9 percent from the same quarter last year, marking a first-quarter record, though operating profit declined 12.2 percent year-on-year. The operating margin dropped to 10.7 percent from 13.1 percent, indicating a decline in profitability.

Hyundai Motor, which reported earnings a day earlier, also achieved record first quarter revenue of 44.41 trillion won. Combined, the two automakers generated 72.43 trillion won in sales and 6.64 trillion won in operating profit during the quarter.

Kia’s sales growth was fueled by strong demand for eco-friendly models and new SUVs. The company sold 772,648 vehicles outside of Korea in the first quarter, its highest-ever first quarter sales figure, surpassing the previous record of 769,917 units in 2014. Popular models included the EV3, Sportage, and Sorento.

“A pull-forward in U.S. demand ahead of expected tariffs and robust growth in emerging markets like India helped boost global sales,” a Kia official said. “Favorable currency exchange rates also contributed to the revenue surge.”

Kia's EV3 SUV [KIA]

Incentives and EV mix drag down profitability

Despite the revenue gains, Kia’s profitability weakened. Increased competition in key markets like North America and Europe led to higher sales incentives. The company estimated the resulting impact on operating profit at 444 billion won. A decline in the sales ratio of high-margin electric SUVs, such as the EV9, also eroded profits by about 369 billion won.

“Kia’s average incentive per vehicle in the United States rose from $1,100 last year to $2,000 this year,” said Kia CFO Kim Seung-jun during an earnings conference call on Friday.

“The temporary drop in sales of high-margin models like the EV6 and EV9, which we’re transitioning to local production in Georgia, also affected our results.”

Hyundai Mobis's acoustic AI inspector checks for quality at the auto parts maker's Changwon plant. [HYUNDAI MOBIS]

Hyundai Mobis posts record performance

Hyundai Mobis also reported all-time high quarterly results, backed by robust vehicle sales from Hyundai and Kia. The company posted 14.75 trillion won in revenue and 776.7 billion won in operating profit, up 6.4 percent and 43.1 percent respectively from a year earlier.

In the first quarter, combined global sales by Hyundai and Kia rose 0.4 percent year-on-year to 1.77 million units. Notably, eco-friendly vehicle sales surged 24.4 percent to 386,426 units, leading to higher sales of value-added parts.

“Growth in high-value electronic components and favorable exchange rates in the global aftersales business supported our performance,” a Hyundai Mobis spokesperson said.

Cars are lined up for export at Pyeongtaek Port in Gyeonggi on April 24. [NEWS1]

U.S. tariffs pose major Q2 risk

The outlook for the second quarter remains uncertain as new U.S. tariffs begin to take effect. A 25 percent tariff on imported vehicles, which took effect on April 3, is expected to impact earnings as early as late May. Hyundai and Kia currently have two to three months' worth of inventory in the United States that was secured before the tariff.

Korea Ratings, speaking at a joint seminar with Moody’s on Thursday, estimated that the tariffs could reduce Hyundai and Kia’s combined operating profit by approximately 5 trillion won, equating to a 1.8 percentage point decline in operating margin.

Hyundai Motor Group has launched a tariff response task force to mitigate the impact. The group plans to reconfigure its global production and supply chain strategies.

“We’re shifting U.S.-bound exports currently made in Mexico to U.S. plants, and reallocating Canada-bound production from the United States to Mexico,” said Hyundai Motor CFO Lee Seung-jo during Hyundai’s earnings call. “We aim to turn this challenge into an opportunity through agile and strategic responses.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY OH SAM-GWON [[email protected]]