Hyundai Recall Not Likely to Hurt Sales, Analysts Say
The voluntary recall of the 4,000 compact cars that Hyundai Motor America has sold in the United States in the past month is unlikely to have much impact on the South Korean auto maker’s success in this country, according to some industry analysts, competitors and the company itself.
Hyundai does not think that the recall will harm the company’s reputation in the United States or prevent it from meeting its goal of selling 100,000 cars in its first year here, according to Bruce Matthias, a spokesman for the Garden Grove-based importer.
“We found this problem, we went to the government and we went to our consumers. It’s a delicate thing because we don’t really have a track record or a reputation here yet, but we’re very comfortable with the way we’ve addressed this situation,” Matthias said.
The subcompact Excel, which went on sale nationally during the second week of February, is the first South Korean car to be marketed in the United States.
Because of its low price--a base of $4,995--it has been the focus of auto and consumer magazine inquiries into its dependability. But reviews have been generally favorable.
Philip Wade, an auto industry consultant with J. D. Power & Associates in Westlake Village, said that recalls “are fairly common. It’s unfortunate for Hyundai, of course, because it comes so soon after their launch. I’d be very surprised if, on the basis of one recall, there was any long-term effect on sales.”
The recall--actually a notice to buyers to bring their cars in for a service check--was ordered when routine checks of Hyundai cars at various ports of entry found three vehicles with missing cotter pins in a critical brake system linkage. A missing pin could cause the link between the car’s brake pedal and master cylinder to disengage, leaving the car without brakes.
On Tuesday, six days after letters were sent to Excel owners telling them to have their cars checked by a Hyundai dealer, Matthias said that about one-third of the vehicles have been checked and that no missing cotter pins have been reported.
At Kim-Hankey Hyundai in Los Angeles, general sales manager Barry Labman said that all cars are checked as they are delivered to the lot and that none had missing cotter pins. And at McPherson Hyundai in Santa Ana, service and parts director Ben Metcalf said he had checked close to 175 cars and had not found any without the cotter pins.
Wade said the problem is not a critical one and does not cast doubt on the overall design of the car. The problem that led to the missing cotter pins, he said, can easily be corrected on the assembly line.
At its South Korean manufacturing facility, Hyundai has added a second quality-control inspection, devoted exclusively to checking the brake linkage cotter pins, Matthias said.
Even competitors such as Isuzu Motors, which has had two recalls in the six years since introducing its cars in America, see no long-range damage from the recall to Hyundai’s reputation.
“This whole thing was voluntary on their part,” said Jack Reilly, a senior vice president with Isuzu. “They found the problem before a government agency did, and they took the steps to go out and fix it. The only thing that might hurt them in the long run is if they have another recall within a short period of time.”
Reilly said, however, that his experience is that a recall will cut down on the number of customers visiting an auto maker’s dealerships for a few days. “But if there’s no further reporting, people will forget about it” and Hyundai won’t suffer, he said.
