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Hyundai Shares Take a Beating Following NHTSA Airbag Investigation

Yesterday, I posted on how the NHTSA had opened up an investigation into problems with airbags not deploying properly. The markets are beginning to react and punish the auto manufacturer as a result:

Shares of Hyundai Motor slid on Monday after a U.S. regulator said it had opened a probe into why some air bags failed to deploy in Hyundai and Kia vehicles following crashes that reportedly killed four people and left six injured.

This is the second investigation by the U.S. National Highway Traffic Safety Administration into the South Korean duo in less than one year, and comes as the automakers grapple with weak sales in the United States.

The agency said it was reviewing the 2012-2013 Kia Forte and 2011 Hyundai Sonata models, encompassing some 425,000 vehicles.

Hyundai Motor Co issued a recall last month for more than 150,000 U.S. Sonatas after non-deployment reports were linked to electrical overstress in the air bag control unit, but said it did not have a final fix yet.

A spokeswoman for Hyundai and Kia declined to comment on whether the recall will be expanded, saying the automakers were cooperating with the investigation.

Shares in Hyundai Motor shares tumbled 4 percent while Kia Motors lost 2.8 percent and Hyundai Mobis, a maker of airbags, slid 5.4 percent.

The agency said the air bag control module was built by ZF Friedrichshafen-TRW, a German auto supplier that acquired TRW Automotive Holdings Corp in 2015.

In May, NHTSA opened a formal investigation into the recall of nearly 1.7 million vehicles by Hyundai and Kia over engine defects.

In 2016, a South Korean whistleblower reported concerns that defects were concealed and that recalls were not issued in a timely manner to the NHTSA.

The fact that Hyundai is concealing manufacturing flaws is a bad sign and has echoes of how the Takata airbag nightmare started.

While I think a lot of the environmental regulation of automobiles is pretty dumb, I am appreciative of the NHTSA’s efforts to enforce safety standards among automobile manufacturers. The automotive industry needs to get serious about safety or these kinds of giant recalls are going to keep happening, and will end up costing them a lot of money if not send them into bankruptcy.

 
Doomberg

Written by Doomberg

I am Doomberg, one of the original founding members of Sparta Report, and have been here since the beginning. I am an insatiable news junkie and enjoy reading and writing about the US territories, the Caribbean, video games, smartphones, and of course conservative politics in general.

I also really like pictures of gas stations and claim full responsibility for the silly gas station motif. I'm presently trapped behind enemy lines in a blue state with no hope of escape! The ride never ends.

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