Hyundai Motor, Kia to rebalance portfolio as US tariff shocks weigh on earnings

Headquarters of Hyundai Motor and Kia in Seoul / Courtesy of Hyundai Motor Group

Hyundai Motor and Kia are moving to rebalance their production portfolio in the United States, in a desperate bid to minimize a possible earnings drop amid the country's imposition of massive auto tariffs.

Last week, Hyundai Motor Group's two automakers reported solid first-quarter earnings, boosted by strong auto sales in the U.S.

The figure, however, is feared to fall in the second quarter and the latter half of 2025, following the U.S. implementation of a 25 percent tariff on imported vehicles.

In response to the escalating trade uncertainty, the group has formed a task force dedicated to setting up a contingency plan to optimize auto production and sales in the U.S.

“We will prepare the contingency plan to shape our ideal production strategies by regions and vehicles,” Lee Seung-jo, executive vice president at Hyundai Motor, told investors during a conference call on Thursday.

The executive also said it will gradually localize production there for more automobiles and auto parts from a long-term viewpoint.

The strategy seems inevitable, given the carmaker's increasing reliance on its U.S. earnings. According to the carmaker’s latest earnings report, it sold some 834,700 vehicles abroad in the first quarter, down 1.4 percent from a year earlier. However, U.S. sales jumped 1.1 percent during the same period.

Hyundai Motor Group Executive Chair Chung Euisun applauds during an opening ceremony for Hyundai Motor Group Metaplant America in Georgia, March 27. Yonhap

Kia is also increasing its vigilance on the sales uncertainty in the U.S. caused by tariffs. The carmaker reported a 6.9 percent sales growth in the first quarter compared to the previous year, driven by rising demand for value-added vehicles, such as hybrid cars.

The carmaker also said it will deal with the U.S. tariff risk by strengthening its production portfolio in the country.

“We have plans to deal with the auto tariffs by reshaping our sales portfolio,” Kia Senior Vice President Kim Seung-jun said Friday during a conference call.

“For now, we sell some vehicles — manufactured at our Georgia plant — to Canada or Mexico, but cars assembled in the U.S. will be assigned for sales preemptively in the U.S."

The carmaker also expects the U.S. tariff shock to start weighing on the company in May.

“We have a two-month inventory for the global market,” he said. “As the tariff shock casts influences on global automakers, we will focus on turning the sense of crisis into an opportunity.”

The Korean government is also going all out for local carmakers to receive tariff exemptions from the U.S., but the outlook remains unclear as it is uncertain whether both sides will reach timely agreements on their pending trade issues.

The tariff risk is expected to become a main trigger driving down auto demand in the latter half of this year, the Kia official said.