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Hyundai Motor's operating profit falls sharply despite record-high sales in Q3

Published: 30 Oct. 2025, 17:05

The Hyundai Motor headquarters in Gangnam District, southern Seoul, on April 25, 2024. [YONHAP]

Hyundai Motor reported a 29 percent drop in operating profit for the third quarter this year compared to a year earlier, despite achieving record-high quarterly sales. The automaker has held back on price hikes even after a 25 percent U.S. tariff on vehicle imports took effect in April, absorbing the impact instead.

However, following the Korea-U.S. summit on Wednesday, expectations have grown that Washington will reduce the tariff to 15 percent — a move that would ease a key source of uncertainty for the company.

On Thursday, Hyundai released its third-quarter earnings and held a conference call with analysts. Revenue rose 8.8 percent on year to 46.72 trillion won ($34.72 billion), the highest ever for a third quarter. But operating profit fell sharply to 2.54 trillion won, down 29.2 percent year-on-year.

“Tariff impacts and intensifying competition in key markets, which increased incentives, had a negative effect on earnings,” the company said. Last month, during its CEO Investor Day in New York, Hyundai revised down its annual operating margin forecast from 7 to 8 percent to 6 to 7 percent, citing tariff pressure.

Hyundai is expected to benefit from the revised 15 percent tariff rate as early as November. Although Korea and the United States agreed to reduce auto tariffs in July, the delayed implementation kept the 25 percent rate in place, putting Korean exports at a disadvantage compared to Japan and the European Union, which currently face only 15 percent tariffs.

Export-bound cars are parked at Pyeongtaek Port in Gyeonggi on Oct. 30. [YONHAP]

Kim Yong-beom, presidential director of national policy, said Wednesday that the tariff cut would be retroactively applied starting from the first day of the month in which the implementing bill is submitted to the National Assembly.

“We are working to submit the bill within November,” he said. If that happens, the 25 percent tariff imposed from Nov. 1 could be retroactively lowered to 15 percent.

“The tariff agreement was extremely welcome news,” said Lee Seung-jo, Hyundai’s executive vice president and CFO, during the earnings call.

“We are currently calculating the exact impact based on a Nov. 1 retroactive application. The biggest gain is the removal of uncertainty around tariffs, thanks to the government’s negotiation efforts.”

With Hyundai now set to compete on a level playing field in the U.S. market — its largest — with Japan and the European Union under the 15 percent tariff regime, enhancing price and product competitiveness has become more critical. During the conference call, the company shared internal strategies to that end.

“Whereas we previously focused on cost reductions for new models, we will now strengthen research and development capabilities to lower costs for mass-produced vehicles as well,” Lee said. “In particular, as hybrid sales increase and their profitability rivals that of internal combustion engine vehicles, we plan to revisit our mid- to long-term cost-reduction roadmap.”

Hyundai Motor's all-new Palisade [HYUNDAI MOTOR]

Hyundai also revealed plans to increase local production in the United States, as most of its popular midsize and large SUVs and hybrid models are still exported from Korea and remain subject to tariffs. Currently, Hyundai produces the Tucson and Santa Fe Hybrid in the United States, while models such as the Elantra — known as the Avante in Korea — and the Sonata, as well as many hybrids, are built in Korea.

“The new Palisade Hybrid, considered a high-margin model, will begin U.S. sales in the fourth quarter this year,” Lee said. “We are internally reviewing plans to manufacture it locally in the United States.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY LEE SU-JEONG [[email protected]]