As the South Korea-U.S. trade negotiations wrapped up, the tariff rate the United States imposes on Korean-made automobiles was cut to 15% from 25%. With the tariff burden reduced, shares of complete vehicle corporations that had been held back showed an uptrend.
However, as the likelihood of a deal being reached may already be reflected in the share prices, some say auto parts stocks could be an alternative.
On the 30th, according to the Korea Exchange (KRX), Hyundai Motor shares closed the regular session at 265,000 won, up 7,000 won (2.71%) from the previous trading day. They opened at 287,500 won, rose to as high as 289,500 won to hit the highest price in the past year, but the gain narrowed as sell orders steadily came in.
Kia's share movement was similar. Right after the regular session opened, it rose to 126,200 won, setting a new one-year high, then finished at 116,200 won. The day-over-day share price increase was limited to 0.35% (400 won).
President Lee Jae-myung and U.S. President Donald Trump concluded the trade negotiations at the end of their second summit. The tariff rate on automobiles was also reduced to 15% from the previous 25%. This means they can compete on equal footing with the European Union (EU) and Japan, which previously wrapped up trade negotiations with the United States.
Securities firms raised their profit forecasts for Hyundai Motor and Kia. While Hyundai Motor and Kia do not need to directly bear the tariffs, the prevailing view was that incentive burdens (subsidies automakers pay to dealers) would increase to maintain price competitiveness.
Park Gwang-rae, an analyst at Shinhan Investment & Securities, projected that the combined annual tariff burden of Hyundai Motor and Kia would fall to the 5 trillion won range from the 8–9 trillion won range due to the tariff cut. Park said, "The tariff reduction has allowed us to raise our 2026 annual operating profit estimates for Hyundai Motor and Kia by 18.2% and 16.3%, respectively."
As profit forecasts rose, major securities firms including Hana Securities, Daishin Securities Co., Meritz Securities, Shinhan Investment & Securities, and Samsung Securities collectively raised their target prices for Hyundai Motor and Kia. Hyundai Motor's target price was adjusted upward to the 285,000–330,000 won range, and Kia's to the 140,000–150,000 won range.
However, because expectations for a deal had been reflected in complete vehicle makers' shares, sell orders poured in mainly from foreign and institutional investors.
The key is whether Hyundai Motor and Kia can continue to deliver results in the U.S. market. Kim Gwi-yeon, an analyst at Daishin Securities Co., projected that market share in the United States would expand centered on new models and that the average selling price (ASP) could rise. Hyundai Motor released the new Palisade in the third quarter of this year (July–September), and Kia plans to unveil the new Telluride in the first quarter of 2026 (January–March).
Shareholder return policies are also of interest to investors. The dividend yields of Hyundai Motor and Kia are currently around 4.7% and 5.4%. In particular, Hyundai Motor plans to buy back a total of 4 trillion won in treasury shares, including common and preferred shares, over three years through 2027, and the securities industry expects the buybacks to ramp up in earnest starting at year-end.
Some also argue that auto parts stocks deserve attention. Hanon Systems, a heat energy management solutions company under Hankook & Company Group, said in its earnings announcement conference call the previous day that it is passing on 95% of its tariff burden to client companies, namely complete vehicle makers.
Kang Seong-jin, an analyst at KB Securities, said, "As Hanon Systems' tariff burden came in far below expectations, we confirmed that tariff costs could be passed on to complete vehicle makers more quickly and in larger amounts than expected," and added, "Given that other parts makers can be expected to show a similar trend going forward, share price gains are more likely to stand out among parts makers than among complete vehicle makers, whose additional upside is limited."