Hyundai Motor Recalls and Toyota`s Fall

Hyundai Motor will recall 139,500 units of its YF Sonata produced between December last year and early this month at its Alabama plant in the U.S. The voluntary and prompt decision came after the U.S. National Highway Traffic Safety Administration launched a probe after receiving complaints from two consumers on faulty steering wheels. This marks the Hyundai-Kia Automotive Group`s second recall this month in the U.S. following Kia Motors` recall of 35,000 units of its Soul and Sorrento models. Against this backdrop, fears are rising over a dent in the brand image of Korean automakers in the world`s largest economy. Korean-made cars have gained increasing popularity there as affordable and safe.

It is a relief that Hyundai announced the recall before an accident occurred, a move apparently made considering the fall in consumer confidence in the once mighty Toyota Motor. At this point, Hyundai must realize that Toyota`s decline was due to sluggish response to consumer complaints and its concealment of defects. Toyota`s recalls that began late last year were also due to defects in acceleration pedals, which the company blamed on the drivers instead of admitting fault. This ultimately resulted in a massive recall.

In February, a recall for the 2011 Hyundai Sonata came due to potential defects in front-door latches, a prompt move which prevented the spread of a quality problem. Even a small defect can result in loss of consumer trust, however, if recalls are repeated.

The Hyundai-Kia Automotive Group upped its global market share even amid the global recession that began in 2008, helping to raise the reputation of Korean cars in the world market. With the completion of its Russia plant this month, Hyundai-Kia has secured a production capacity of 6.58 million units. By 2012, that figure will rise to seven million after three plants in China and one in Brazil are completed. A drastic increase in production, however, will force parts suppliers to rush to meet deadlines, which could result in quality problems. Hyundai should remember that Toyota was negligent in checking the quality of parts supplied in the course of recklessly expanding overseas production.

Kim Ki-mun, the head of the Korea Federation of Small and Medium Business, said, "The Toyota incident can also hit Korea if large Korean companies continue to focus on only lowering production costs." If Hyundai excessively cuts costs to raise global market share, this could inevitably lead to poor quality management of parts. Whether the company`s rapid production caused the recalls must be determined.