Hyundai Motor Q1 profit drops 31%
Hyundai Motor's first-quarter operating profit fell 30.8% to 2.51 trillion won despite record revenue, hit by US tariffs, Middle East disruption, and
Hyundai Motor Co. reported a sharp 30.8% drop in first-quarter operating profit on Thursday. The South Korean automaker's preliminary profit was 2.51 trillion won ($1.7 billion) for January-March, even as revenue hit a quarterly record of 45.9 trillion won.
A convergence of external pressures squeezed margins. The company cited the US-Iran war, US tariffs, and rising raw material costs.
External Pressures Hit Margins
Vehicle sales in Africa and the Middle East plummeted 22.2% year-on-year. Hyundai attributed much of this decline to reduced exports following the outbreak of the US-Iran conflict.
Simultaneously, the company absorbed about 860 billion won in tariffs on shipments to the United States. These tariffs were first imposed in April last year. Rising raw material prices added further strain. The Middle East conflict lifted benchmark crude oil prices above $100 a barrel during the quarter, driving up costs for materials like aluminum.
Consequently, Hyundai's cost-of-sales ratio increased 2.7 percentage points to 82.5%. This crimped profitability.
Hybrids and Market Share Provide Resilience
Hyundai's top-line revenue held up better than the broader auto market. Global vehicle sales fell 2.5% to 976,219 units. This compared favorably to a 7.2% drop in worldwide auto demand for the quarter.
The company gained ground in the US market. Its market share there rose to 6.0% from 5.6% a year earlier.
Hybrid models were a particular bright spot. Sales surged 26.9% to a record 173,977 vehicles. Their share of total volume climbed to 17.8%. Including electric vehicles, Hyundai sold 242,612 eco-friendly vehicles in the quarter, up 14.2% year-on-year. These models accounted for 24.9% of total global sales.
| Metric | Q1 2026 Figure | Year-on-Year Change |
|---|---|---|
| Operating Profit | 2.51 trillion won | -30.8% |
| Revenue | 45.9 trillion won | +3.4% |
| Global Vehicle Sales | 976,219 units | -2.5% |
| Hybrid Vehicle Sales | 173,977 units | +26.9% |
| Eco-friendly Vehicle Sales | 242,612 units | +14.2% |
Strategic Response and Market Reaction
The company stated it would revisit its budget and business plans for the year to protect profitability against mounting external risks. Hyundai plans to rein in nonessential spending while pressing ahead with new vehicle launches. These include a facelifted Grandeur sedan scheduled for the second half of the year, in a bid to support both sales and margins.
On Thursday, Hyundai Motor shares fell 1.7% to close at 532,000 won. This underperformed the broader Kospi index, which rose 0.9%.
