Kia said the hit from US tariffs totaled 1.2 trillion won (R14.6 billion) in the third quarter and the duties will likely cost it the same amount again in the final three months of the year despite Seoul and Washington reaching a trade deal.
Tariffs saw the South Korean automaker’s operating profit slump 49% from a year earlier to 1.5 trillion won, far below the 2.2 trillion won median estimate compiled by Bloomberg.
That’s despite the company posting its highest-ever third-quarter revenue.
Wholesale deliveries of 785,137 units were also a record for the third quarter, driven by robust global sales of electric and hybrid cars.
South Korea’s major carmakers are adding up the cost of US tariffs, which are set to linger despite an agreement reached this week that will see the US lower duties on Korean imports to 15% from 25%.
Kia’s affiliate Hyundai Motor has said the tariffs cost it 1.8 trillion won in the third quarter.
While the trade deal offers clarity, Kia’s Chief Financial Officer Kim Seung Jun said the effects will likely only fully kick in next year.
That’s because the carmaker has already paid the 25% tariff rate on existing inventory in the US, he said. The 15% will only be reflected in sales starting in December, he said.
In addition to the tariffs, Kia said increased warranty expenses from a weaker won, the launch of new vehicles and intensifying competition from Chinese rivals hurt its results.
Still, the company said the profit slump has “bottomed out” and it expects a rebound starting the fourth quarter, due to solid demand in North America and Europe, as well as the planned launch of new electric models including the EV4 and EV2.
Hyundai and Kia have been ramping up production at their factories in Alabama and Georgia and bolstering their hybrid lineup to meet demand in North America.
The brands have also been introducing locally-designed or produced EV models in Europe, India and China.
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