Hyundai, Kia to recall nearly 1.5 million vehicles over engine issue

Fri Apr 7, 2017 3:49pm EDT
 
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By Hyunjoo Jin

SEOUL (Reuters) - Hyundai Motor Co (005380.KS: Quote) and Kia Motors Corp (000270.KS: Quote) plan to recall 1.48 million vehicles in the United States, Canada and South Korea due to engine issues, the latest blow for two firms already struggling in key markets.

The recall could cost the two firms hundreds of millions of dollars each revives quality concerns at a time when Hyundai and Kia face a sharp drop in China sales and sluggish demand in the United States and South Korea.

The South Korean companies are recalling 1.19 million cars and sport utility vehicles in the United States, 114,187 in Canada and 171,348 in South Korea due to the engine issue that increases the risk of a crash, according to safety regulators in those respective countries.

The U.S. recall involves Hyundai's Sonata and Santa Fe and Kia's Optima, Sorento and Sportage.

The recall could hit earnings with the recall costing each company as much as 250 billion won ($220.19 million), said Koh Tae-bong, an analyst at Hi Investment & Securities.

The companies declined to comment on the cost of the recall.

Hyundai Motor shares closed down 2.4 percent, compared to a flat broader market .KS11. Kia Motors were down 0.9 percent.

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FILE PHOTO: Dave Zuchowski, President and CEO of Hyundai North America, introduces the 2015 Hyundai Sonata at the New York International Auto Show in New York City, April 16, 2014.  REUTERS/Mike Segar/File Photo