Hyundai (KRX:005380) and Kia Motors (KRX:000270), both of South Korea, are recalling 1.48 million automobiles in the United States, South Korea, and Canada over issues with the engines of these vehicles. This will be the latest blow for the two automakers that are struggling already in many key markets. The demand for automobiles is sluggish in the US. Demand is low in South Korea too. Hyundai and Kia have both seen a sharp drop in sales even in China, which is another important market.
The recall is likely to cost both the companies a lot of money. Koh Tae-bong, who works as an analyst at Hi Investment & Securities says both the businesses will take a hit by at least $220.19 million or 250 billion won. It could be more. Both Hyundai and Kia declined to comment on the cost of the recall or how this may impact their business.
The Cars That Are Going To Be Recalled
A total of 1.19 million sports utility vehicles are cars will be recalled in the US. In Canada, they will recall 114,187 vehicles, while in South Korea the figure is even higher at 171,348. In all cases, the recalls are over engine issues that may increase the risk of a crash. The transport ministry in South Korea has already issued a warning saying metal debris in crankshafts may cause engine damage, and that this can cause possible loss of motive power.
Among the vehicles that will be recalled in the United States are Santa Fe and Sonata of Hyundai, and Sportage, Sorento, and Optima of Kia. The recall in South Korea covers Kia’s K5, K7, and Sportage models, while for Hyundai it will be the Grandeur and Sonata sedans.
Hyundai, Kia Vehicles Recalled Earlier As Well
Of course, this is not the first time the vehicles of Kia or Hyundai are being forced to be recalled because of issues in their Theta engines. Both the automakers make the engines themselves. A couple of years back, Hyundai had to recall 470,000 Sonata sedans in the US so that the faulty engine parts could be replaced. This prompted concerns about the quality of the engines even in South Korea.
However, Kia (KRX:000270) and Hyundai (KRX:005380) issued a statement soon after, saying the engines made in South Korea were not defective. In response to concerns, both the automakers extended the warranty for the Theta 2-equipped models.