Hyundai, Kia Reveal Bad Q3 News
Korean carmakers say old recalls still affecting profits.
More vehicle owners are keeping their cars instead of buying new ones and therefore need to have engine work done.
IMAGE: Getty Images/welcomia
Hyundai and Kia together included $2 billion in third-quarter results to reflect ongoing customer vehicle maintenance following 2015 and 2017 engine recalls.
The Korean carmakers, to help improve their images after the nearly 1.7 million-unit recalls, offered car owners lifetime engine warranties, and the cost of honoring those warranties is still affecting their bottom lines.
The costs add up to over half of Hyundai’s net quarterly profit and 77% of Kia’s, according to Refinitiv.
More vehicle owners are keeping their cars instead of buying new ones in the continued climate of low inventories; therefore, more need to have engine work done.
Hyundai indicated it increased provisions due to engine-replacement claims exceeding forecasts as passenger vehicle lifetimes climb, as well as the fact that the Korean won has recently been weak against the dollar, Reuters reported.
READ MORE: 2022 Vehicle Safety Recalls on Downward Trend
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