Hyundai Motor·Kia Set Quality Provision of About 2.9 Trillion Won... "Thorough Response from Customer-First Perspective" (Comprehensive)

Additional Q3 Quality Costs for Theta2 Engine
Reflecting External Environment Changes Such as Exchange Rates, Semiconductors, and Corona

[Asia Economy Reporter Kiho Sung] Hyundai Motor Company and Kia will reflect additional provisions worth approximately 2.9 trillion KRW related to the 'Theta2 engine' in the third quarter of this year.

On the 18th, Hyundai Motor Company and Kia announced that they will record quality costs totaling 2.9044 trillion KRW in their third-quarter earnings, with Hyundai Motor Company accounting for 1.3602 trillion KRW and Kia 1.5442 trillion KRW. As a result, this is expected to weigh on the third-quarter business performance, which was anticipated to show high profitability due to strong sales of high-margin models such as sport utility vehicles (SUVs) and favorable exchange rate effects. However, Hyundai Motor Company and Kia emphasized that this is a proactive and thorough response from a customer-first perspective regarding quality issues.

Previously, in the third quarter of 2020, Hyundai Motor Company and Kia recorded provisions totaling 3.3944 trillion KRW for customer measures related to Theta2 engine quality issues, with Hyundai Motor Company accounting for 2.1352 trillion KRW and Kia 1.2592 trillion KRW. The reason for reflecting additional quality costs after two years was influenced by an increase in engine replacement rates and a high exchange rate reaching the 1,400 KRW level.

In particular, the company explained that the extended residual life of used cars due to semiconductor supply issues and the somewhat insufficient predictive accuracy caused by the COVID-19 pandemic have been realized in this adjustment.

Additionally, the company stated that it has more reasonably estimated and reflected the costs associated with providing an unprecedented lifetime engine warranty program.

Previously, in the third quarter of 2019, Hyundai Motor Company and Kia expanded the application of the Engine Vibration Detection System (KSDS) to vehicles equipped with the Theta2 engine and decided to offer a lifetime warranty for the engine.

This content was produced with the assistance of AI translation services.