Seoul: Kia Corp., South Korea's second-largest carmaker, reported a 23.3 percent decline in its second-quarter net profit, attributed to the newly imposed U.S. import tariffs effective from April. For the three months ending in June, the company's net profit fell to 2.26 trillion won (approximately US$1.6 billion), down from 2.95 trillion won in the same period last year, as stated in the company's regulatory filing.
According to Yonhap News Agency, Kia's operating profit also saw a reduction of 24.1 percent, dropping to 2.76 trillion won from 3.64 trillion won a year earlier, despite an increase in sales by 6.5 percent to 29.34 trillion won from 27.56 trillion won. The company explained that higher incentives in major markets, intensified competition, and the enforcement of U.S. tariffs on imported vehicles significantly impacted the quarterly bottom line.
Despite these challenges, Kia noted that volume growth in key markets, higher selling prices of premium models, and favorable exchange rates helped maintain profitability fundamentals. The U.S. government began imposing a 25 percent tariff on all imported vehicles as of April 2, prompting the South Korean government to seek negotiations to reduce the tariff rate for Korean vehicles before the August 1 deadline set by U.S. President Donald Trump.
Kia's net income for the first half of the year fell by 19 percent to 4.66 trillion won from 5.76 trillion won a year earlier. The operating profit also decreased by 18 percent to 5.77 trillion won from 7.06 trillion won, while sales increased by 6.7 percent to 57.36 trillion won from 53.78 trillion won. The company attributed a 786 billion won reduction in operating profit during the first half of the year solely to the 25 percent U.S. tariff.
To mitigate the impact of these tariffs in the second half of the year, Kia plans to focus on selling vehicles manufactured at its U.S. plants directly to American customers, rather than exporting them to other regions such as Canada, Africa, and the Middle East. Additionally, the company aims to reduce sales incentives to preserve profitability.
Looking forward, Kia expressed concerns over growing uncertainties related to U.S. trade policy, rising geopolitical risks, and slowing global consumption, which are expected to continue affecting vehicle sales. To address these challenges, Kia plans to enhance sales of sport utility vehicles (SUVs) and fuel-efficient gasoline hybrid models in global markets, while also expanding its electric vehicle (EV) lineup preemptively.
On Friday, Kia's shares closed down by 0.86 percent at 104,100 won, significantly underperforming compared to the broader Korea Composite Stock Price Index (KOSPI), which experienced a slight increase of 0.18 percent.