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Hyundai, Kia plan major car recall in US and S. Korea over engine issue

Friday, 7 April 2017

SEOUL: Hyundai Motor Co and Kia Motors Corp are expected to recall more than a million vehicles in South Korea and the United States due to engine issues, the latest blow for 2 firms already struggling in key markets.

The recall, which could cost the 2 firms hundreds of millions of dollars each, comes as Hyundai and Kia face a sharp drop in China sales and sluggish demand in the United States and South Korea. They will recall 171,348 vehicles in South Korea because of a manufacturing problem, which leads to possible engine stalling.

The South Korean automakers have also submitted plans to US authorities to recall an unidentified number of vehicles in the United States over a “similar” engine issue, a spokesperson at the South Korean duo said. The US recall would reach some 1.3 million vehicles, an amount close to the duo’s annual US sales. The US recall alone could cost the companies as much as 250 billion won (US$220.19 million) each, hitting earnings, said Koh Tae-bong, an analyst at Hi Investment & Securities.

A Hyundai official declined to confirm the expected cost of the US recall, nor the number of vehicles involved. The recall helped push Hyundai Motor shares lower by as much as 2.7%, compared to a 0.4% decline in the broader market. Kia Motors were down 1.1%.

The recall in South Korea covers Hyundai’s Sonata, Grandeur sedans and Kia’s K5, K7 and Sportage models equipped with a 2-litre or 2.4-litre Theta 2 gasoline engine produced before August 2013, the South Korean transport ministry said.

The ministry said metal debris in crankshafts could cause engine damage, leading to possible engine stalling. Hyundai will replace a defective engine with a new one after inspection. The recall will start on 22 May. In 2015, Hyundai Motor said it would recall 470,000 Sonata sedans in the United States to replace faulty engine parts, sparking questions of safety back home.

But Hyundai and Kia has said that engines produced at domestic factories were not defective. They instead extended the warranty period for five Theta 2-equipped models in South Korea. The Hyundai spokesperson said the latest recall involves a new problem.

Source by: Internet

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