Hyundai to spend another $2bn on defective engines

Hyundai to spend another $2bn on defective engines

October 24, 2022 Off By admin

Concern Hyundai Group will spend another two billion dollars on defective motors. According to Reuters, more than half of third-quarter profits will go towards compensating affected customers in North America: Hyundai will allocate 1.36 trillion won ($945 million), Kia – 1.54 trillion won ($1,070 million). Impressive spending – a consequence of the fashion decision to offer a lifetime warranty on problematic power units.

Problems with the engines of the Theta II GDi family became known in the second half of the 2010s. Hyundai and Kia have had to recall millions of vehicles, and three years ago, the Korean auto giant offered owners of troubled cars a lifetime warranty on engines. Now the consequences of this decision are showing: because of the crisis, Americans have become less likely to change cars, so the number of warranty replacements turned out to be more than expected.

As of October 2020, the net losses of Hyundai and Kia from faulty engines amounted to three billion dollars, and taking into account image losses and a collapse in shares, the Korean concern missed five billion in US currency. Now it turned out that due to a new wave of replacements of power units, the auto giant will have to fork out another two billion. However, analysts believe that this time the reputational costs will be minimized.

The $2 billion unplanned spending will keep Hyundai and Kia short of quarterly profits: Reuters estimates that after the American compensation reserve, Hyundai will have about $1 billion left and Kia about $320 million. Reports from both automakers should be published soon.