Hyundai Kia engine fire Nearly 3 million cars will be forcibly recalled

Recently, according to foreign media reports, the National Highway Traffic Safety Administration (NHTSA) has strengthened the investigation of engine fires that have plagued some Hyundai Motors (005380.KS) and Kia Motors (000270.KS) for more than 6 years.

The National Highway Traffic Safety Administration (NHTSA) said it had begun an "engineering analysis" of more than 3 million vehicles covering models from 2011 to 2016 to assess whether previous recalls covered all vehicles, ongoing plans and long-term viability of ongoing initiatives in non-safety areas by Hyundai and Kia, while monitoring vehicles previously recalled.

It is understood that the next step after the engineering analysis may be another recall. Hyundai motor said on the same day that it will continue to cooperate with NHTSA on the investigation of the non-collision fire of the engine. Kia Motors did not respond immediately. Previously, regulators said they failed to recall 1.6 million vehicles with hidden engines in time. Last year, Hyundai and Kia Motors agreed to accept a record $210 million fine.

NHTSA has received 161 complaints that could have caused a fire due to engine failure, some of which occurred on vehicles that have been recalled. Since 2015, Hyundai and Kia have had 31 fire- and engine-related recalls in the United States, according to ABC News. The recall covers more than 20 models from 2006 to 2021, totaling more than 8.4 million vehicles. Many of the recalls involved manufacturing defects that prevented oil from flowing through the engine block, and many required the replacement of expensive engines.

Zhang Xiang, an analyst in the automotive industry, said that Hyundai and Kia belong to the same group, and many engines and platforms are shared, so engine failures or fires have appeared in both brand models. At present, Hyundai and Kia have involved more than 3 million vehicles with engine fires, and the United States has carried out mandatory recalls.

Zhang Xiang said: The general vehicle recall is divided into two situations, one is the car company's voluntary recall, the other is the government's mandatory recall, and hyundai and Kia have been forced recall. Recalls due to engine fire accidents are very serious, which is rare in the entire automotive industry, and I have not encountered an engine fire recall in the automotive industry for 20 years. This poses a serious safety hazard to the user, and the maintenance cost is also very high. For the brand will have a very bad impact, other car companies should also be warned, try to avoid similar design defects and quality problems.

In addition, according to the latest news, Hyundai Motor Group may be laying off the engine research and development department of its Namyang Research Institute in Seoul, and at the same time, the department will be reorganized into an electrification research and development team and set up a battery research and development team. Some South Korean media said that the head of Hyundai Motor R&D said, "Our engine research and development has made great achievements, but now we must start the future." But as of now, the modern side has not responded to this.

Earlier this month, Hyundai Motor announced its global sales figures for November 2021. In November this year, Hyundai Motor's global sales totaled 312,602 units, down 17.1% year-on-year. Sales outside of Korea were down 18.4% to 250,531 units, while sales in Korea were down 11.4% to 62,071 units.

Last year, Hyundai motor set a global sales target of 4.1615 million units for 2021. Today, based on Hyundai's total global sales of 3,552,180 as of November, it will need to complete nearly 700,000 sales in a single month in December this year. In contrast, Hyundai Motor's monthly sales in November may be difficult to achieve the sales target.

Hyundai Motor said that the main reason for the overall decline in sales is the disruption in the supply of semiconductor parts worldwide and the impact of the ongoing epidemic crisis. In the future, Hyundai Motor will flexibly adjust its production plan according to inventory conditions and continue to manage risk in a challenging business environment. In addition, the company will make every effort to resume sales by strengthening the growth of the IONIQ 5 pure electric vehicle and genesis luxury brand lineup.

Recently, according to Insideevs, Hyundai Motor Company CEO Jaehoon Chang announced that the current focus of Hyundai and Genisais brands is electrification. According to Hyundai Group's latest plan, by 2030, they will launch 13 pure electric models, including the hot-selling Hyundai Ioiq 5, as well as the upcoming Ioniq 6 and Ioniq 7. Among them, the Genises brand will phase out fuel vehicles from 2025 and achieve zero emissions of new cars by 2030.

Hyundai Group's goal for FY2022 is to sell 220,000 pure electric vehicles, 1 million in FY2025 and 1.7 million in FY2026. In order to complete the grand transformation plan, Hyundai Group needs to invest billions of dollars and stop investing in the development of new internal combustion engines to save costs, which is one of the important sources of funds for this transformation.

Zhang Xiang, an analyst in the automotive industry, believes that it is normal for Hyundai Touchi to cancel the engine department and lay off employees, and Daimler Benz has also announced that it will stop developing new engines in the future. For Hyundai Group, layoffs mean reducing and cutting off some engine-related projects, indicating that it is rapidly developing in the direction of new energy, so the demand for engines will naturally decrease in the future.

And the current regulations on fuel consumption and emissions in most countries are relatively strict, if you continue to develop the engine, it will lead to a significant increase in costs, and the brand competitiveness will weaken. Therefore, the abolition of the engine department and layoffs are also the right choice, which is also a common method for international car companies.

At present, international companies announced that they will stop developing new engine projects, but for the time being, they have not heard the relevant news of domestic car companies, which is also related to the fact that most domestic car companies do not have the ability to independently develop engines, and many domestic car companies are entrusted to foreign companies to develop engines. In the past two years, the sales of traditional fuel vehicles in China have declined, the sales of new energy vehicles have continued to rise, and BAIC and Changan have announced the time node of stopping the sale of fuel vehicles, which means that no new engines will be developed, which is also the overall trend of the market.