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Hyundai Motor shares slide following U.S. probe of airbag failures

SEOUL — Shares in Hyundai Motor tumbled on Monday on a U.S. probe into why airbags failed to deploy in some of its Sonata sedans, with investors fretting about potential recall costs for the once popular cars. The probe, which follows crashes that reportedly killed four people and left six injured, will review the 2011 Sonata sedan as well as the 2012-2013 Forte made by affiliate Kia Motors, encompassing some 425,000 vehicles. It marks the second investigation by the U.S. National Highway Traffic Safety Administration into the South Korean duo in less than one year, exacerbating headaches for Hyundai which reported in January its worst annual earnings in seven years. Hyundai has issued a recall for more than 150,000 U.S. Sonatas after incidents of non-deployment were linked to electrical overstress in the airbag control unit, but said it did not have a final fix. "What I am concerned about is that the recall will be expanded to other markets," said Ko Tae-bong, an analyst at Hi Investment & Securities. The Sonata and Forte sedans were responsible for driving sales for Hyundai and Kia in key markets in recent years, although they are no longer as popular as they once were. Ko estimated the U.S. recall could cost as much as $575 million if airbags were replaced in 425,000 vehicles under review and the automakers were found responsible for the problem. Hyundai Motor shares tumbled 4.8 percent while Kia Motors lost 3.7 percent. Parts supplier Hyundai Mobis fell 5.4 percent while the broader market was down 0.7 percent. Hyundai declined to comment on whether the recall would be expanded. Kia said it has not confirmed problems with the airbags but added it would "act promptly to conduct a safety recall, if it determines that a recall would be appropriate." The automakers told the South Korean regulator that the Sonata and Forte models sold in the domestic market were not affected, an official at South Korea's transport ministry told Reuters. The U.S. regulator said the airbag control units were built by ZF Friedrichshafen-TRW, a German auto supplier that acquired TRW Automotive in 2015, adding that it would determine if any other manufacturers used similar airbag control units and if they posed a safety risk. The NHTSA also said that electrical overstress appeared to be the root cause in the 2016 recall by Fiat Chrysler America of 1.4 million U.S. vehicles for airbag non-deployments in significant frontal crashes.

Nuclear deal could make Iran next big car market

Iran is a huge and hugely appealing target for Western firms - it's population is nearly the size of Germany's, it is well educated and includes a substantial middle class, and there is a built-in industrial capability. Because of the sanctions that have been in place for nearly five years now over its nuclear program, however, its citizens and domestic industry haven't been able to purchase and expand, so investment opportunities are not only manifold, they are severely undervalued. Most of the auto industry has been sitting on the sidelines waiting for the Iranian game to start. A report in Automotive News says that Iran's two automakers, Iran Khodro and SAIPA - Societe Anonyme Iranienne de Production Automobile - produced one million light vehicles last year for 77.5 million people. According to Wikipedia there were 200 vehicles per 1,000 citizens in 2012, and that was before the industry took a nosedive. That number puts it between Uruguay and Jamaica. Chery, Kia, Peugeot, and Renault were the carmakers with major operations in-country before all but Chery pulled out. In the vacuum, Chery and other Chinese automakers have thrown lots of product at the market, getting 27 models in a range of segments built or supplied there, with results that are probably best described as ambivalent among observers but financially lucrative for the Chinese. Peugeot has re-established ties, and Kia, Mercedes-Benz, Peugeot, Renault, Toyota, and Volkswagen were attendees at the Iran Auto Show last November. The domestic companies say that this time they want local investment that includes technology transfer, so the Western carmakers that do decide to get in will find tougher negotiators than before. Peugeot, for instance, had a 51-49 partnership with Iran Khodro before pulling out; the new agreement is a 50-50 venture. As a 'gift' to the world for a final deal that encourages global investment, Bloomberg says that the price of crude would go down by $15 per barrel. News Source: Automotive News - sub. req.Image Credit: Atta Kenare/AFP/Getty Images Earnings/Financials Government/Legal Kia Peugeot Renault iran sanctions khodro

Kia to green-light GT and Provo for production?

Kia is looking to inject a bit more performance life into its brand, and according to Auto Express, the company is looking at creating sporty models based on two of its recent concept cars, the GT four-door from the 2011 Frankfurt Motor Show (shown above) and the Provo hybrid hatchback that debuted in Geneva last week (inset, right).
"The GT is close to being approved and going into production, but, as with all our cars, they have to be developed on a sound financial footing," Benny Oeyen, Kia Europe's VP of marketing and product planning, told Auto Express. When it debuted, the GT four-door was powered by a turbocharged 3.3-liter V6, reportedly good for 389 horsepower and 394 pound-feet of torque, mated to an eight-speed automatic gearbox.
The Provo, on the other hand, could stand as a sort of halo car for the company's B-segment offerings. It would ride on the same front-wheel-drive platform as the Rio compact, though Kia says it's eager to keep the concept's gasoline-electric powertrain intact. "Our brand is currently rational, but there's space for a B-coupe," says Oeyen. Of course, the company would indeed have to look at different naming possibilities for its B-segment coupe, since the week-old Provo is already stirring up some controversy.