Hyundai Warns of Risks to Growth as Profit Misses Estimate

Hyundai Motor Co. warned of slowing growth as US President Donald Trump’s tariff threats and a turbulent domestic political landscape hurt the South Korean automaker’s sales outlook.

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Published Jan 23, 2025  •  2 minute read

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(Bloomberg) — Hyundai Motor Co. warned of slowing growth as US President Donald Trump’s tariff threats and a turbulent domestic political landscape hurt the South Korean automaker’s sales outlook.

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The company aims to sell 4.17 million cars this year, just 0.1% more than in 2024, as a raft of global uncertainties weighs on demand, Hyundai said Thursday. The world’s third-largest carmaker, which saw 7.7% growth in full-year sales last year, set a target of 3% to 4% for 2025. 

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The subdued outlook follows a mixed final quarter. Hyundai reported 2.8 trillion won ($1.9 billion) in operating profit for the three months ended Dec. 31, down 17% from a year earlier and missing the 3.4 trillion won estimated by analysts. Sales rose 12% in the period, helping push annual revenue to a record high.

Hyundai’s warning highlights the uncertainties facing global carmakers in 2025. Top of the list of risks: Trump is considering revoking subsidies and other policies that favor EV purchases. That would deal a major blow to the company, which along with its affiliate Kia, is the second-most popular EV brand in the US — they trail only Tesla Inc.

Hyundai, which runs manufacturing plants in Alabama and Georgia, expects it’ll be able to minimize the impact of Trump’s threats to impose tariffs on imports of foreign goods by increasing US production, executives said during an earnings call. It will take some time for Trump to cancel or reduce subsidies and tax credits for EVs from former President Joe Biden’s Inflation Reduction Act as changes need to pass through Congress, meaning the law could be kept until end of 2025, the carmaker said.

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With demand for EVs slowing, Hyundai is targeting a 30% increase in global sales of hybrid vehicles. Its facility in Georgia, originally supposed to make electric cars, is set to make hybrids and even gas-powered vehicles, depending on demand, said Zayong Koo, head of investor relations. “We have decided to have a flexible plan,” he said, citing the slower-than-expected mass-market transition to EVs. 

Hyundai doesn’t have plants in Mexico and Canada. That means they’re better positioned to cope with Trump imposing universal tariffs on foreign goods than rivals like Honda Motor Co. and Toyota Motor Corp. that have facilities in those countries, Chief Financial Officer Lee Seung Jo said.

“It’s not just us that will be affected by potential tariffs,” he said. “We are calculating potential impacts in our scenarios given universal tariffs may be imposed as early as April.”

Beyond the US, Hyundai also faces potential headwinds from Europe, where car sales are stagnating due to persistent inflation, higher borrowing costs and apathy toward electric models. For 2025, Hyundai expects a 1.1% decrease in sales in the region, compared with 0.8% growth in North America and around 4% in Asia Pacific.  

At home, the Seoul-based company faces volatile financial markets and a weaker won after President Yoon Suk Yeol’s ill-fated martial law declaration late last year. The currency weakened about 12% against the dollar in the fourth quarter, which the company estimated caused about 770 billion won in warranty costs and dragged down operating profit.  

Hyundai said it’s planning total investment of 16.9 trillion won this year, up from 14.6 trillion won in 2024. It’s also targeting a 7% to 8% operating margin for the year.

(Updates to add details throughout.)

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