Hyundai’s Margin Pressures Eclipse Hybrid Sales Growth Amid Tariff Headwinds

Hyundai Motor's 2025 financial performance revealed a stark divergence between top-line resilience and eroding profitability. While annual revenue climbed 6.3% to 186.3 trillion won ($130.6 billion), operating profit plunged 19.5% to 11.5 trillion won as U.S. tariffs and aggressive incentive programs squeezed margins. The automaker's electrification push showed promise however, with hybrid and EV sales jumping 27% to represent nearly a quarter of total volume.

Fourth-quarter results underscored the mounting challenges, with net profit collapsing 21.7% year-over-year to 10.4 trillion won ($7.3 billion) despite robust demand for SUVs and hybrids in North America. Industry analysts attribute the profit crunch to geopolitical trade barriers and intensifying competition in key markets, though Hyundai has yet to quantify each factor's precise impact.

The company's expanding U.S. manufacturing footprint, including its new smart plant in Georgia, suggests long-term confidence in North American demand. But immediate headwinds persist - Q4 operating profit plummeted nearly 40% as global vehicle deliveries slipped 3.1% to 1.03 million units. Hyundai's stock (HYUD.L) dipped modestly following the earnings release as investors weighed near-term margin pressure against the strategic transition to electrified vehicles.