Shares of Kia Corporation edged down Wednesday, one day after the Korean company said quarterly earnings would reflect losses up to $1.08 billion (1.5 trillion won) due to engine recalls from years ago.
Kia's shares were down 0.14% to reach $48.35 (69,000 won) around 4:05 pm GST. However, they reached a high of $49.4 (70,500 won) earlier in the day. Hyundai and Kia said they'll record a combined loss of $2 billion (2.9 trillion won) in their third-quarter results, Kia said in a statement Tuesday.
Refinitiv data shows that losses amount to more than half of Hyundai's estimated third-quarter net profit and 77% of Kia's profit. The weakness of the Korean Won against the dollar has also led to additional costs, the manufacturers noted.
The automakers recalled nearly 1.7 million vehicles in 2015 and 2017 in the US, citing a problem with their Theta GDI engine that raised the risk of crashes.
They said that the losses are due to an increase in the number of engine replacement claims as more US customers are likely to drive their old cars than buy new ones due to the surging inflation and the tight production caused by the global chip shortage.
After the recall, automakers should offer an unprecedented lifetime engine warranty.
Kia hasn't announced when will it report its third quarter results, while Hyundai is expected to report it next Monday. In 2020, Kia and Hyundai together made $2.5 billion (3.6 trillion won) in losses related to engine issues.
In September 2021, they recalled more than half a million cars and mini-vans due to glitches relates to car blinkers. In May 2022, Hyundai said it would pour an additional $5 billion into the US by 2025 to strengthen collaboration with US firms in advanced technology, a day after announcing a similarly sized investment to set up an electric vehicle (EV) plant in Georgia.
