Hyundai Motor and affiliate Kia Motors are being investigated by US prosecutors over whether vehicle recalls were conducted properly, a source said and documents reviewed by Reuters showed, sending their shares sliding.
The South Korean firms, together the world’s No.5 automaker, recalled nearly 1.7 million vehicles in 2015 and 2017 in the United States in one of their biggest recalls in the country, citing an engine failure that increases the risk of a crash.
The US Attorney’s Office for the Southern District of New York (SDNY), part of the US Department of Justice (DoJ), has launched a criminal investigation, the person, who had knowledge of the matter, told Reuters news agency.
It remains to be seen whether the probe will lead to charges, the person added. If criminal charges are filed, it could lead to hefty fines for Hyundai and Kia.
An investigation by US prosecutors adds to Hyundai’s and Kia’s woes at a time when they are grappling with sluggish sales in the United States and China.
The duo's shares fell on Thursday after the news, with Hyundai down 3.2 per cent to their lowest level in nearly nine years and Kia losing 4.8 per cent. Their parts affiliate, Hyundai Mobis, also slid 6.5 per cent in a wider market that slipped 0.3 per cent.
“There are a lot of uncertainties surrounding the US investigations. If charges are filed, this would not only lead to fines, but also hurt their brand image and sales,” Nomura analyst Angela Hong said.
The DoJ is coordinating with the US transport regulator, National Highway Traffic Safety Administration (NHTSA), on the investigation, the person said, asking not to be identified as the matter is confidential.
