Kia, Hyundai Motor Group affiliate and South Korea’s second-largest carmaker, said Wednesday that its operating profit fell sharply in 2025 as higher US tariffs weighed on earnings, even as the carmaker posted record revenue for a second straight year.
Kia posted an operating profit of 9.08 trillion won ($6.37 billion) in 2025, down 28.3 percent from a year earlier. Revenue rose 6.2 percent to a record 114.14 trillion won, marking the highest in the company’s history.
Kia sold a record 3.14 million units globally, up 1.5 percent, driven by robust demand for hybrid models. Its operating margin fell to 8 percent from 11.8 percent a year earlier, as higher US tariffs weighed on profitability.
The tariff impact alone cost the company around 2.9 trillion won last year, and it expects around 3.3 trillion won of tariffs to be reflected in this year’s results, said Jung Seong-kook, Kia's senior vice president, during the company's earnings conference call.
Beginning in April last year, the US slapped a 25 percent tariff on all imported automobiles and auto parts. South Korea and the US reached a trade agreement in July and lowered the rate to 15 percent in return for Seoul's pledge to invest $350 billion in the US. But it wasn't until Nov. 14, when Seoul proposed legislation to support special investment into the US, that the reduced tariff rate was applied retroactively from the first day of that month.
“Although the 15 percent auto tariff took effect on Nov. 1, the actual impact of the lower rate was not felt until late November because of inventory,” said Kia CFO Kim Seung-jun during a conference call. “As a result, the reduction in tariff effects between the third and fourth quarters did not appear particularly significant.”
As a result, the fourth quarter results showed a similar trend. Revenue rose 3.5 percent on-year to 28.08 trillion won, marking the company's highest-ever fourth-quarter figure. But operating profit plunged 32.2 percent to 1.84 trillion won.
Looking ahead, Kia projects a recovery in 2026, targeting global sales of 3.35 million vehicles, up 6.8 percent from 2025. It aims to post revenue of 122.3 trillion won and operating profit of 10.2 trillion won.
Kia said it will step up its market push this year across its three key regions, including the US, Europe and India, backed by new model launches. The company is targeting sales of 915,000 units in the US, 594,000 in Europe and 302,000 in India.
The company seeks to broaden its SUV and hybrid lineup in the US, roll out new electric vehicle models in Europe beginning with the EV2 and strengthen its premium SUV portfolio in India through the release of the all-new Seltos.
sahn@heraldcorp.com
