South Korea Orders Hyundai & Kia to Recall 240,000 Vehicles

South Korea Orders Hyundai & Kia to Recall 240,000 Vehicles

The South Korean government has ordered automakers Hyundai Motors and Kia Motors to recall up to 240,000 vehicles after an ex-Hyundai employee raised concerns over issues affecting 12 different models. The whistleblower, 26-year-old engineer Kim Gwang-ho, had been with the company for 26 years.

It is the first time the country's government has issued a compulsory vehicle recall. In addition to this, the transport ministry has also asked state prosecutors to investigate whether the companies knowingly covered up the defects. The models affected include Hyundai’s Elantra, Sonata, Santa Fe and Genesis vehicles, as well as Kia’s Mohave, Sorento SUVs and Carnival minivan.

Hyundai and Kia initially rejected the recall, claiming that the defects did not affect safety. They added there had been no reports of injuries or accidents. However, a joint-statement today said the companies had accepted the decision and would take the necessary steps to repair or replace the faulty parts. The affected parts include vacuum pipes, fuel hoses and brake lights.

"Safety is always Hyundai-Kia's number one priority and we make decisions on recalls or any other customer protection steps in compliance with regulators around the world and stringent internal procedures,” the statement said.

This latest recall will add to the 1.5 million vehicles in the United States and South Korea that the automakers offered to fix last month over possible engine stalling issues. At the time, analysts said the US recall alone could cost the companies as much as $207 billion each. This was one of the issues flagged last year by Kim, who reported 32 defects in total. He first reported the defects to local regulators and then travelled to the United States to inform the authorities there of possible safety lapses.

Hyundai and Kia had targeted combined vehicle sales of 8.25 million vehicles in 2017, up from the 7.9 million units they sold globally in 2016. These figures may need to be adjusted after this latest setback. Shares of Hyundai Motor ended down 1.6 percent and Kia Motors fell 1 percent.

The automakers must now submit a recall plan to the ministry within 25 days.

Stay up-to-date with the latest market developments, trending news stories and industry advances with the Research and Markets blog. Don’t forget to join our mailing list to receive alerts for the latest blog plus information about new products.

Published by Research and Markets