Hyundai Motor announced Thursday that it has established a task force to address the impact of U.S. tariffs on its operations. As part of its response, the company revealed it has moved some Tucson crossover production from Mexico to the United States. Additionally, Hyundai is considering relocating some production of U.S.-bound vehicles from South Korea to other locations.
This move comes as Hyundai reports a 2% increase in its first-quarter operating profit. The automaker also reaffirmed its annual earnings targets, despite the ongoing trade challenges. Hyundai and its affiliate Kia, the third-largest global automaker group by sales, are particularly vulnerable to U.S. tariffs. The two companies generate about one-third of their global sales in the U.S. market, with imports accounting for roughly two-thirds of their U.S. sales, according to data from Korea Investment & Securities.
Hyundai expressed concerns about the business outlook, citing ongoing trade tensions and other macroeconomic uncertainties. The task force, which was launched this month, aims to minimize the financial impact of the U.S. tariffs. The group will also work to increase local sourcing of car components within the United States.
The U.S. government, under President Donald Trump’s administration, imposed a 25% tariff on automobiles beginning April 2. It also plans to impose similar tariffs on auto parts by May 3, raising concerns that the new duties will increase vehicle prices and reduce sales.
In response, South Korea and the United States are working together on a trade package designed to eliminate the new tariffs before July, when a pause on reciprocal tariffs is set to end. South Korea’s Finance Minister Choi Sang-mok emphasized the auto sector’s vulnerability and has requested some exemptions from the tariffs.
Hyundai’s task force adds to the automaker’s broader $21 billion investment plan for the U.S., announced last month. The company has pledged to increase production at its new Georgia factory, although any significant ramp-up in U.S. output will take time. Tariffs, however, could cost Hyundai billions.
While the shift of Tucson production to Alabama is notable, it is relatively small, as Hyundai produced only about 16,000 Tucsons in Mexico last year. In addition, Hyundai has been frontloading vehicle shipments to the U.S., resulting in 3.1 months of inventory in North America. The company plans to keep prices steady on its current model lineup until June 2, after which it will adjust prices as needed.
Hyundai’s operating profit for the first quarter reached 3.6 trillion won ($2.5 billion), a 2% rise compared to the previous year. This performance was bolstered by a weaker South Korean won and a 40% increase in hybrid vehicle sales. The weaker currency contributed 601 billion won to Hyundai’s operating profit, helping to offset the effects of higher sales incentives in the U.S. and Europe, as well as a drop in sales of higher-margin SUVs.
In the U.S., Hyundai’s vehicle sales to dealerships rose by 1% in the first quarter, while retail sales jumped 11%, as customers rushed to purchase vehicles ahead of tariff hikes. Hyundai has maintained its revenue growth forecast of 3-4% and expects an operating profit margin between 7.0% and 8.0%.
The company also revealed ongoing talks with General Motors (GM) to explore collaboration in various areas, although details remain confidential. Hyundai hopes to announce more information about these plans in the near future.
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