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Hyundai, Kia set to shift to Q3 loss on provisions for massive recall

(Hyundai Motor Co.)
(Hyundai Motor Co.)
Hyundai Motor Co. and its affiliate Kia Motors Corp. said Monday they plan to reflect a combined 3.4 trillion won ($3 billion) in provisions for product recall and quality control in their balance sheets for the third quarter of the year, indicating that they are set to swing to net losses in the July-September period.

Hyundai and Kia, which together form the world's fifth-biggest carmaker by sales, set aside massive provisions for additional costs for the recall of a faulty engine and preemptive measures for quality management, the companies said in separate regulatory filings.

The carmakers are expected to shift to a net loss for the July-September period as the hefty provisions are reflected as losses in their net results.

Hyundai and Kia put aside 2.1 trillion won and 1.26 trillion won in provisions in the September quarter, respectively.

Late last year, Hyundai Motor Group reached a settlement with car owners over its Theta II gasoline direct injection (GDi) engine for problems, such as engine stall and non-collision fires, in the United States.

This week, Hyundai Motor said it will voluntarily recall 77,000 Kona Electric models due to a faulty battery cell component, as 14 cases of fires in the model -- 10 domestically and four overseas -- have been reported since 2018.

In the third quarter of 2019, Hyundai Motor posted a net profit of 460.5 billion won, up 51 percent from 306 billion won a year ago on a weak won and robust sales of sport-utility vehicles.

Hyundai and Kia are scheduled to release their third-quarter results on Oct. 26. (Yonhap)