Bloomberg News

Hyundai, Kia Recall 1.7 Million Vehicles on Electronics

April 04, 2013

Hyundai, Kia Fall on Recall for Electronic Defects

The frame of a 2011 Hyundai Sonata is welded by robots on the assembly line in the body weld building at the Hyundai Motor Manufacturing Alabama (HMMA) plant in Montgomery, Alabama on Oct. 13, 2010. The recall includes 2011 Sonatas. Photographer: Mark Elias/Bloomberg

Hyundai Motor Co. (005380), South Korea’s largest automaker, and its affiliate Kia Motors Corp. (000270) recalled more than 1.7 million vehicles in the U.S. from five model years for electronic defects. Their shares fell.

Hyundai dropped 5.1 percent, the most since Nov. 5, to 207,000 won at the close in Seoul trading. Kia sank 3.3 percent, while the benchmark Kospi index fell 1.2 percent.

About 1.1 million vehicles are affected by a possible malfunction that may prevent brake lights from illuminating and the cruise control from turning off, raising the risk of a crash, Hyundai said on the U.S. National Highway Traffic Safety Administration website. Kia is recalling 623,658 vehicles for the same defect. The automakers combined sold 1.26 million cars and light trucks in the U.S. last year.

“The latest recall doesn’t seem to be an issue that could hurt brand image of the South Korean carmakers in the U.S.,” Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $29 billion, said by phone today. “Given that the actual costs they have to cover are marginal, today’s share-price drop is excessive.”

Hyundai and Kia are also recalling 160,000 vehicles in South Korea for the same stop-lamp malfunction, the companies said in separate e-mails.

The malfunctioning switches cause affected electronics to not work intermittently and don’t affect brake performance, Jim Trainor, a U.S.-based spokesman for Hyundai, said in an e-mail.

The recall includes Accents and Tucsons from model years 2007 to 2009, Elantras from 2007 to 2010, Santa Fes from 2007 to 2011, Veracruzes from 2008 to 2009, 2010 to 2011 Genesis Coupes and 2011 Sonatas. The Elantra is Hyundai’s best-selling car in the U.S. this year, according to Autodata Corp., an auto researcher.

“We are working hard to solve the problem as quickly as possible,” Hyundai said in an e-mailed response to Bloomberg query.

Kia’s recall includes Rondos and Sportages from model years 2007 to 2010, Sorentos from 2007 to 2011, Sedonas from 2007, Souls from 2010 to 2011 and Optimas from 2011.

The stop-lamp defect can also lead to intermittent operation of the push-button start, prevent the gear shifter from being moved out of the park position, or cause the electronic stability control malfunction light to illuminate, according to the NHTSA filings.

The vehicles included in the latest recall were built after a previous Hyundai recall for stop-lamp switch replacement, the company said in a March 29 letter to NHTSA. The company, in the letter, told regulators it changed its production process since the 2009 recall and that the cars and trucks in the new recall were manufactured before all the changes were made.

Canada Probe

A Transport Canada investigation led to the new recall following a November notification that it had received nine complaints about stop-lamp switch replacement for vehicles not included in the first recall.

In an unrelated notice posted, Hyundai said it recalled 186,254 Elantras from the 2011 to 2013 model years. Support brackets attached to the lining along the top of a car’s interior can detach when a side-curtain air bag deploys, it said.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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