Hyundai, Kia shares down on recall for electric flaw
WASHINGTON: Hyundai Motor Co, South Korea’s largest carmaker, and its affiliate Kia Motors Corp recalled more than 1.7 million vehicles in the United States from five model years for electronic defects. Their shares fell.
Hyundai dropped 5.1%, the most since Nov 5, to 207,000 won at the close in Seoul trading. Kia sank 3.3%, while the benchmark Kospi index fell 1.2%.
About 1.1 million vehicles were affected by a possible malfunction that might prevent brake lights from illuminating and the cruise control from turning off, raising the risk of a crash, Hyundai said on the US National Highway Traffic Safety Administration (NHTSA) website. Kia is recalling 623,658 vehicles for the same defect. The carmakers combined sold 1.26 million cars and light trucks in the United States last year.
“The latest recall doesn’t seem to be an issue that could hurt brand image of the South Korean carmakers in the United States,” Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co, which oversees about US$29bil, said by phone yesterday. “Given that the actual costs they have to cover are marginal, today’s shareprice drop is excessive.”
Hyundai and Kia were also recalling 160,000 vehicles in South Korea for the same stop-lamp malfunction, the companies said in separate e-mails.
The malfunctioning switches caused affected electronics to not work intermittently and didn’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 United States 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.