Hyundai, Kia Expected to See Q1 Earnings Decline

Hyundai Motor and Kia are anticipated to post sluggish first-quarter results for 2026. While both companies are expected to see a slight increase in revenue, operating profit is projected to fall by more than 20% compared to the same period last year, according to analyses driven by U.S. tariff pressures and currency fluctuations. According to securities firm forecasts, Hyundai Motor is expected to record first-quarter revenue of 45.8923 trillion won and operating profit of 2.7866 trillion won. This represents a 3.3% increase in revenue but a 23.3% decrease in operating profit compared to the previous year. Kia is also forecast to report revenue of 29.6002 trillion won and operating profit of 2.3294 trillion won, with revenue up 5.7% and operating profit down 22.6%.

Both companies achieved relatively solid global sales volumes. Hyundai Motor sold 975,123 units in the first quarter, a 2.6% decrease year-on-year, while Kia sold 779,169 units, a 0.8% increase.

The decline in profitability is attributed to the burden of U.S. auto export tariffs, which began in April 2025, and an increase in provisions for sales guarantees due to rising won-dollar exchange rates. The U.S. tariff costs incurred in the first quarter are estimated to be around 2 trillion won, and the currency appreciation has financially inflated the provisions for sales guarantees, which are set in foreign currency terms. Lee Jae-il, a researcher at Eugene Investment & Securities, analyzed that the base effect from preemptive demand before the tariffs took effect in the first quarter of last year is reflected in the first-quarter results of this year. He added that the increase in provisions for sales guarantees due to year-end exchange rate hikes and the Palisade recall also contributed.

Complex external factors such as supply chain disruptions from a fire at a safety equipment factory, sluggish sales in the Middle East due to the Iran conflict, and rising transportation costs have also negatively impacted profitability. An industry insider commented that while sales volume held up well, profitability was significantly eroded by a confluence of external factors like tariffs, exchange rates, and logistics costs.