Hyundai recall could grow further, sounds warning on quality

Thu Apr 4, 2013 6:02am EDT
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By Hyunjoo Jin

SEOUL (Reuters) - South Korea's Hyundai Motor Co (005380.KS: Quote) and its affiliate Kia Motors Corp (000270.KS: Quote) will take "global action" to fix a potentially faulty brake light switch, after they said they planned to recall almost 1.9 million cars in the United States.

The move may mean the world's fifth-biggest automaker ends up recalling even more vehicles than that number, Hyundai's U.S. record, and is a stark warning that it may have sacrificed quality standards for rapid expansion.

Chairman Chung Mong-koo consistently stresses that quality should come first, and has recently slowed the pace of capacity expansion in favor of stricter quality control, but analysts say the shift in direction has come too late.

"Hyundai has built factories very fast around the globe until recent years, but its quality improvement has failed to keep up with its rapid volume growth," said Kim Phill-soo, a professor at Department of Automotive Engineering at Daelim University College in Seoul.

"The latest recall highlighted loopholes in Hyundai's quality system."

A Hyundai executive said alarm bells starting ringing in the company after it slid down industry rankings for quality in recent years.

"We have fixed problems, and quality rankings will improve from this year," the executive told Reuters without elaborating further. He spoke on condition of anonymity as he was not authorized to talk to the media.

Last year Hyundai fell to 18th in a key quality survey by J.D. Power and Associates, from 11th in 2011.   Continued...

A Hyundai logo is seen on a car at the Paris Mondial de l'Automobile, September 28, 2012. REUTERS/Christian Hartmann