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Photo = Hyundai Motor Group |
[Alpha Biz= Paul Lee] According to industry reports on the 6th, after the Trump administration announced reciprocal tariffs on the 2nd (local time), securities firms have been issuing reports adjusting their investment opinions on companies.
In a report released on the 3rd, Korea Investment & Securities downgraded its investment opinion on Hyundai Motor (005380) from "Buy" to "Neutral."
Although automobiles were excluded from the new tariffs, as previously announced by President Trump, the 25% tariff on imported cars took effect on the 3rd. While Hyundai Motor avoided double taxation, concerns about weakened price competitiveness and declining sales and profitability have emerged due to the high proportion of exports to the U.S. in Korea's automobile industry.
Last year, 1.43 million vehicles were exported to the U.S. from Korea, accounting for 35% of total production and 51% of total exports. Of these, Hyundai Motor and Kia Motors accounted for 1.01 million units, while GM Korea exported 410,000 units.
Korea Investment & Securities forecasts that if a 25% tariff is applied to Korean-made cars, the total tariff burden will reach approximately 5.145 trillion KRW. This estimate is based on Hyundai Motor's 2024 expected exports of 638,000 units, excluding 67,000 electric vehicles, and an average selling price (ASP) of 36.1 million KRW. The assumption is that Hyundai's U.S. production at its "Hyundai Motor Group Metaplant America" (HMGMA) will replace exports of electric vehicles in the long term.
The firm also downgraded its investment opinion on Kia Motors (000270) from "Buy" to "Neutral." If the 25% tariffs are imposed on both Korean and Mexican-made vehicles, it is expected that Kia’s tariff burden will amount to approximately 3.999 trillion KRW.
This estimate is based on Kia's 2023 Korean exports of 377,000 vehicles, excluding 56,000 electric vehicles, and an ASP of 36.57 million KRW. The assumption also includes 140,000 units of Mexican-made exports with an ASP of 25 million KRW. Combined, the tariff burden for Hyundai Motor and Kia Motors is estimated to reach around 9 trillion KRW.
Jose Munoz, CEO of Hyundai Motor, stated at the Seoul Mobility Show on the previous day that the company does not plan to raise prices in the U.S. and will focus on its inherent competitiveness, including quality and service.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
