Hyundai Motor Co (KRW: 005380) is in focus this morning following reports that the South Korean conglomerate plans on investing about $20 billion in the United States in an attempt to navigate new tariffs.
About a quarter of that investment will go to setting up a steel plant in Louisiana, as per sources that spoke with CNBC today on condition of anonymity.
Note that automakers are being broadly seen as notable victims of Trump’s new trade policies. Shares of Hyundai are currently down about 30% versus their 52-week high.
What we know about Hyundai’s upcoming US investment
Hyundai’s Louisiana facility will reportedly create some 1,500 new jobs. It will produce next-gen steel that Hyundai will use to manufacture its electric vehicles in the US.
The South Korean giant is expected to officially announce the investment as soon as later today.
The news arrives only days after Jose Munoz – the chief executive of Hyundai Motor said in an interview with Axios that the “best way for the company to navigate tariffs is to increase localization.”
Investors should note that Hyundai is currently a top competitor of Tesla in the US electric vehicle market. The automaker has one automotive plant in Georgia, one in Alabama, and is expected to announce plans of setting up a third one, also in Georgia, on Monday.
US is currently Hyundai’s largest sales region
Even without tariffs, the South Korean automaker struggled with profitability in its fiscal Q4.
Big incentives aimed at improving sales and higher warranty costs resulted in a more than 17% year-on-year decline in its profit in the fourth quarter.
Note that Trump tariffs are particularly significant for Hyundai as the US currently contributes the most to its overall sales. Last year, the car company sold 988,000 vehicles in the United States that translates to a 9% annualised growth.
Hyundai stock could, therefore, recovery on the back of today’s announcement as it suggests the automaker is fully committed to maintaining its strength in the world’s second-largest auto market.
Should you invest in Hyundai stock today?
Hyundai shares may be worth owning following the recent pullback because the company guided for a total of 4.17 million car sales globally for 2025.
Despite macro headwinds, that indicates an increase from 4.14 million in 2024. The automaker has set aside nearly 17 trillion won ($11.76 billion) for new investment as well.
Last week, a Reuters report also suggested Hyundai was in advanced talks with General Motors over electric vans and pickup trucks, with possibility of a broader strategic alliance down the line.
While Hyundai shares haven’t done all that well in recent months, it’s worth mentioning that the automotive stock currently pays a lucrative dividend yield of 5.63% that further makes it attractive to own at current levels.
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