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(News Focus) Massive recall feared to hurt image of Hyundai, Kia
SEOUL, April 4 (Yonhap) -- A massive vehicle recall in the United States and South Korea by Hyundai Motor Co. and its smaller sister company Kia Motor Corp. is feared to dent their hard-won reputation abroad, highlighting the challenges the carmakers face in becoming premium global brands, market watchers said Thursday.

   Hyundai, South Korea's top automaker, said it is recalling about 1.059 million cars in the U.S. to fix a problem with the vehicle's brake light switch. The recall affects seven models, including the Santa Fe, the Tucson and Veracruz crossover vehicles, as well as Sonata sedans and Genesis Coupes built in South Korea and the U.S. between 2007 and 2011.

   Kia, the second-largest carmaker in South Korea, also said it is recalling 623,638 units in six models, including Sorento mid-size crossovers and the Soul box cars built in South Korea and the U.S. during the cited period.

   Separately, Hyundai said it is recalling 186,254 Elantra compacts produced between 2011 and 2013 to fix an air bag problem.

   The recall is likely to deal a blow to the flagship units of Hyundai Motor Group, the world's fifth-largest carmaker, which have been struggling to recover since their images were sullied by the inaccurate fuel economy ratings of their cars sold in the U.S., analysts said.

   "It is a big disaster for Hyundai and Kia at a time when the issue of fuel efficiency has subsided," said Kim Pil-soo, a professor of automotive engineering at Daelim University in Anyang, south of Seoul.

   Kim said Toyota Motor Corp. and other Japanese rivals could benefit from this massive recall, which is occurring just five months after Hyundai and Kia suffered damages to the images of their brands over the fuel economy ratings.

   Hyundai and Kia have yet to settle a class-action lawsuit by U.S. consumers who say they were misled by the carmaker's inflated fuel economy ratings. In November, Hyundai and Kia blamed procedural errors at testing operations for the inaccurate ratings.

   The recall also brings into question the commitment by Hyundai Motor Group Chairman Chung Mong-koo to improve the quality of the vehicles and the images of the brands as he seeks to compete with premium global brands like BMW and Mercedes-Benz.

   Last year, Hyundai ranked 53rd with a brand value of US$7.5 billion at the Best Global Brands released by the international branding consultancy Interbrand Corp. Hyundai finished ahead of other global carmaking brands like Audi, Porsche and Nissan.

   Kia ranked 87th with a brand value of $4.09 billion. It was the first time the carmaker broke the top 100 in terms of brand value.

   Hyundai Motor President Chung Jin-haeng told reporters that he will quickly handle the situation, saying he will ensure that the aftermath of the recall will not last long in the U.S. market, which accounted for 17.7 percent of combined car sales of Hyundai and Kia last year.

   Also Thursday, Hyundai said it is recalling about 110,000 units in South Korea of Avante compacts, Santa Fe and Veracruz crossover vehicles produced between September 2008 and June 2011 to fix brake light switches.

   Kia is also recalling about 50,000 units of Carens compact multi-purpose vehicles, Sorento mid-size crossovers and Soul box cars built between June 2010 and June 2011 to fix the same problem, the officials said.

   Hyundai and Kia took the voluntary step as a precaution, though no accidents or injuries have occurred in South Korea or the U.S. due to brake light switch defects.

   Last year, Hyundai and Kia recalled a total of 501,778 units in the U.S., according to data posted on the Website of the National Highway Traffic Safety Administration, the U.S.'s top auto regulatory agency.

   The latest recall comes as sales of Hyundai and Kia cars showed signs of recovery in the U.S last month.

   Hyundai Motor sold 68,306 vehicles in the United States in March, up 30.6 percent from a month ago. Kia Motors sold 49,125 units in the U.S. last month, up 18.4 percent from a month ago.

   Hyundai and Kia ranked seventh in terms of sales in the U.S. in March as their combined market share accounted for 8.1 percent of all vehicles sold in the U.S. last month, according to Hyundai.

   "The recall could have a negative influence on brand image and confidence, though it will not lead to a sharp fall in sales of Hyundai and Kia cars," said Yoon Pil-joong, an analyst at Samsung Securities.

   Shares of Hyundai Motor closed at 207,000 won ($184) on the Seoul bourse on Thursday, down 5.05 percent from the previous session's close. Kia Motors tumbled 3.27 percent to 53,300 won.

   entropy@yna.co.kr
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