Seoul: Kia Corp., South Korea's second-largest automaker, reported a significant decline in its third-quarter net profit, which fell by 37.3 percent compared to the same period last year. This downturn is attributed to the newly imposed U.S. import tariffs that came into effect in April.
According to Yonhap News Agency, net profit for the three months ending in September decreased to 1.42 trillion won (US$996.6 million), down from 2.27 trillion won a year earlier, as stated in the company's regulatory filing. The automaker highlighted that the net result was impacted by U.S. tariffs on imported vehicles, increased global incentives, and a rise in the value of dollar-denominated debt when converted into the won.
The U.S. dollar's value increased to 1,402.20 won at the end of the third quarter from 1,319.60 won a year earlier, as per data from the Bank of Korea. During this period, tariffs on Korean vehicles were set at 25 percent, notably higher than the revised 15 percent applied to vehicles from Japan and the European Union.
Nevertheless, U.S. President Donald Trump announced on Wednesday an agreement to reduce the tariff on Korean vehicles to 15 percent during a summit with South Korean President Lee Jae Myung. This decision was part of the finalization of Seoul's US$350 billion investment pledge under a broader tariff agreement reached in July.
Kia's operating profit also saw a steep decline of 49.2 percent, falling to 1.46 trillion won in the third quarter from 2.88 trillion won the previous year. However, sales experienced an increase of 8.2 percent, reaching 28.68 trillion won from 26.52 trillion won.
Looking ahead to the fourth quarter, Kia plans to enhance its lineup of gasoline hybrid models globally while sustaining its electric vehicle (EV) initiatives despite a slowdown in EV sales. From January to September, net income dropped by 24.3 percent year-on-year to 6.08 trillion won, and operating profit decreased by 27.3 percent to 7.24 trillion won on sales of 86.05 trillion won, marking a 7.2 percent decline from the previous year.