June 29, 2017

South Korea recalls Hyundai cars, asks probe on cover-up

17 May 2017, 01:04 | Ignacio Smith

Kia Rio

Kia Rio

South Korea ordered Hyundai Motor Co 005380.KS and affiliate Kia Motors Corp 000270.KS to recall 240,000 vehicles over safety defects flagged by a whistleblower - a sharp slap on the wrist that will exacerbate reputational woes for the automakers. This came after a tip off from a whistleblower. His tip-off has prompted the government to issue its first ever compulsory vehicle recall.

We wrote about the recall earlier this week - Hyundai and Kia were fighting the government's decree that the two brands proceed with a voluntary recall.

Chennai, The Tamil Nadu government on Thursday said that South Korea's Kia Motors decided not to locate its plant in the state as its sister company Hyundai Motor has already set up two plants near here.

The five alleged defects include brake vacuum lines for Avante, wheel lug nuts for Mohave, parking brake alert signals for Sonata and Genesis, engine control canisters for Genesis and Equus and fuel lines for Santa Fe, Sorento and Carnival.

Kim Gwang-ho, a 55-year-old Hyundai employee of 25 years, told the BBC he couldn't let it go on any longer.

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Hyundai's i30 hatchback is among the models affected by the recall.

The latest recall comes after the two firms offered to fix 1.5m cars in South Korea and the United States over possible engine stalling. On May 12, the Ministry announced that a recall would be issued for five design defects uncovered at Hyundai and Kia. This comes after a hearing on Monday in which Hyundai and Kia refused to accept the government's recall request made last month.

Regarding the question of whether it had knowingly covered up the defects, it said, "We make decisions on recalls and any other necessary customer protection steps in compliance with regulators around the world as well as our internal procedures".

The recall is a blow to the both Hyundai and Kia.

The transport ministry has also asked prosecutors to investigate whether there is any evidence of a cover-up.

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