Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Hyundai Motor asked to focus more on quality
Hyunda Santa Fe 2020 / Korea Times file
By Yi Whan-woo
By Yi Whan-woo
The latest recall of more than 390,000 Hyundai automobiles in the United States and Canada is prompting calls for the Korean automaker to focus more on boosting quality rather than cutting costs.
Following an order from the U.S. National Highway Traffic Safety Administration, the company has been recalling over 203,000 Santa Fe SUVs manufactured from 2013 through 2015 since early May after they were found to be leaking brake fluid that could lead to an engine fire in the worst case scenario.
Hyundai is also recalling nearly 187,000 vehicles with 2-liter engines, including Elantras manufactured from 2019 through 2020 as well as Konas and Velosters made from 2019 through 2021. Piston rings in the engines may not have been properly heat-treated, which can cause engine damage, oil leaks and possible fires.
Some industry sources argue that the recall is attributed to cost cutting and time efficiency being overly stressed by Hyundai Motor Group Chairman Chung Euisun as part of efforts to bolster quantity management.
After succeeding his father Chung Mong-koo and taking office in October 2020, the new chairman included cost cuts as a criterion in employee performance evaluations and also called for automobiles to be designed more quickly, in two years instead of three, according to the sources.
They added that engineers and factory workers were stressed out by Chung's management style, which disrupted their focus on ensuring vehicle quality.
“These were believed to be the main reasons behind faulty cars manufactured by Hyundai Motor Group,” one source said, noting the conglomerate's other auto making affiliate, Kia, separately recalled over 147,000 Soul and Seltos models produced from 2020 through 2021 in April, in the U.S., due to piston ring problems.
Kia said it had four reports of fires potentially related to the issue.
Another source urged Hyundai Motor “to emphasize quality control in management,” saying, “recalls are becoming increasingly more common.”
Headquarters of Hyundai Motor Group in southern Seoul / Korea Times file
Hyundai Motor Group dismissed the arguments.
“Minimizing costs and time are certainly important elements in manufacturing, but the chairman did not necessarily link them to evaluating the performance of workers,” a Hyundai Motor employee said.
He explained there are many factors that can cause faulty automobiles and therefore it was not correct to point to Chung's management style as the main cause.
The worst case, according to the employee, was the failure of Theta 2 gasoline engine that was mounted on a series of models, including the Sonata, Grandeur, Santa Fe and Veloster, all manufactured by Hyundai Motor, plus Kia's Sorento and Sportage SUVs.
The affected engines were those manufactured between 2011 and 2019. In the U.S., 4.17 million of those vehicles were recalled last year, while 520,000 were recalled in Korea.
Following a class action lawsuit in the U.S. in 2019, Hyundai Motor and Kia have been offering lifetime warranties for the engine and cash compensation to customers.
“But even at that time, cost-cutting efforts were not cited as the cause if the problem,” the employee said.
Moon Hong-ki, a professor at Doowon Technical University's Department of Automotive Engineering, voiced a similar view.
“There are thousands of components that make up of a single automobile, meaning there are many things that can unexpectedly cause a fault” he said. “This makes us cautious when talking about the reason behind recalls.”