South Korean prosecutors raid Hyundai offices after engine defect allegations
Authorities in South Korea have raided Hyundai offices as part of an investigation into the firm’s handling of vehicle recalls over engine defects, according to local media.
Prosecutors searched the firm’s quality division in southern Seoul as part of their probe into whether Hyundai and partner Kia delayed fixing defects that prompted massive recalls in Korea and the US.
The story was first reported by news website Chosun Biz.
Read more: Hyundai to lay off Chinese workers after sales slump
The probe follows a 2017 complaint by South Korean civic group YMCO which made the allegations, which Hyundai and Kia deny.
Hyundai, which shares the quality division with Kia, was not immediately available for comment. City PM has also contacted the prosecutor’s office.
The car makers are also being investigated by US safety regulators over the recall of nearly 1.7m vehicles after the discovery of engine defects.
Hyundai will add the probe to its mounting list of troubles, which were last month laid bare as it reported a slump in quarterly Chinese sales.
The firm shifted 23 per cent fewer cars in the final quarter of 2018 in China than it did in the same period in 2017, which has forced it to lay off thousands of workers in the country.
Though it remains unclear how many people the car manufacturing giant is planning to lay off, Chinese financial magazine Caixin said the Hyundai-Kia joint venture expects 1,500 surplus workers in the first quarter of 2019.
Read more: Honda: What's really hurting car manufacturers?
Hyundai, along with its joint venture partner in the region Kia, sold only 790,000 cars against its target of 900,000, only just above its six-year low of 785,000 in 2017, the year Korea’s diplomatic row with Beijing hampered business via poor consumer sentiment. Hyundai’s capacity for Chinese vehicle manufacturing is 1.65m annually.
The country’s recent economic slowdown – caused in part by its trade war with the US – has hit car makers hard. Volkswagen, Daimler, BMW and Jaguar Land Rover have all either cut profit forecasts or swung the axe at jobs in response to cooling demand in the country in recent months.