Hyundai Motor Co. (KRW 005380), a South Korean conglomerate, is the focus of attention today following reports that it plans to invest about $20 billion in America in an effort to navigate new tariffs.
According to anonymous sources who spoke with CNBC on Monday, about a quarter will be spent on establishing a steel mill in Louisiana.
Note that automakers have been widely viewed as the notable victims of Trump’s new trade policies. Hyundai shares are currently down 30% from their 52-week high.
What we know about Hyundai’s upcoming US Investment
Hyundai’s Louisiana plant will create 1,500 new jobs, according to reports. It will produce next generation steel that Hyundai will be using to manufacture its electric cars in the US.
The South Korean giant will likely announce the investment today.
The news comes just days after Jose Munoz, the chief executive of Hyundai motor, said in an Axios interview that “the best way for the company navigate tariffs is by increasing localization.”
Investors should be aware that Hyundai is currently the top competitor to Tesla on the US electric vehicle markets. The automaker currently has two automotive plants in Georgia and Alabama. It is expected to announce Monday plans to build a third plant, also in Georgia.
Hyundai’s largest market is the United States
Even without tariffs the South Korean automaker struggled to make money in its Q4 fiscal.
The fourth quarter profit fell by more than 17% compared to the previous year due to large incentives designed to improve sales and higher warranty costs.
Note that Trump tariffs have a particular impact on Hyundai, as the US is the largest contributor to its total sales. Last year, Hyundai sold 988,000 cars in the United States. This is a 9% growth on an annualised basis.
Hyundai stock may recover on the back of the announcement today, as it indicates the automaker’s commitment to maintaining its position in the second largest auto market in the world.
Should you invest in Hyundai stocks today?
Hyundai shares are worth buying after the recent pullback, because the company has guided for 4,17 million global car sales by 2025.
This is an increase over the 4,14 million cars in 2024. The automaker also set aside almost 17 trillion won ($11.76billion) for new investments.
A Reuters report last week suggested that Hyundai was also in advanced discussions with General Motors about electric vans and pick-up trucks, with the possibility of a broader alliance down the road.
Hyundai shares haven’t performed well in recent months. However, the auto stock pays a lucrative 5.63% dividend yield that makes it even more attractive to own.
This post Hyundai to invest 20 billion dollars in US to avoid potential tariffs may be updated as new information unfolds
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