Hyundai Motor's Q1 Profit Drops 30.8% Amid Tariffs and Middle East Conflict Impact

Hyundai Motor has reported a significant decrease in its first-quarter operating profit, a challenging outcome attributed to a confluence of external pressures including escalating trade tariffs and geopolitical instability.

While the company achieved record-high revenue for the first quarter, the operating profit saw a substantial 30.8% year-on-year decline. This downturn is largely explained by the imposition of U.S. tariffs, which added an estimated 860 billion won in costs, and disruptions in sales, particularly the halt in Palisade production due to safety concerns linked to the Middle East conflict, resulting in a 247 billion won loss in sales volume. Additionally, rising costs for essential raw materials like iron, nickel, and lithium further impacted profitability.

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We plan to establish a robot production system with an annual capacity of 30,000 units by 2028 as planned.

Despite these headwinds, Hyundai Motor is strategically navigating the global automotive landscape by prioritizing the sale of high-value, high-margin vehicles. The company reported a record-breaking first quarter for hybrid vehicle sales, with a 27% increase year-on-year. This focus on electrification and premium models, coupled with plans for new vehicle launches and tailored regional strategies, demonstrates Hyundai's commitment to enhancing profitability and adapting to market shifts. The company is also actively managing the impact of a fire at a key valve supplier, implementing contingency plans to mitigate production losses.

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We are developing alternatives and conducting internal tests, and some will be normalized in April.