Hyundai-Kia recall won’t move prices for used carsThe recent recall by Hyundai and Kia will not make big influence on the price of their used cars in Korea, according to the nation’s largest used car dealer, SK Encar.
Hyundai Motor and Kia Motors said they will recall nearly 1.7 million vehicles in the United States because of faulty brake lamp switches. On Wednesday, they also started to recall more than 160,000 vehicles in Korea for the same problem, following instructions from the Ministry of Land, Infrastructure and Transport
According to a SK Encar, any decline in used car prices will be in relation to how much the faulty part affects safety and performance.
The report from the U.S. National Highway Traffic Safety Administration said Hyundai and Kia model’s brake switch may interrupt operation of the push-button start feature and the brake transmission shift interlock feature as well as deactivate brake lights, vehicle dynamic control and cruise control.
But SK Encar said Hyundai and Kia’s fault isn’t directly related to safety and since no accidents linked to the switch have been reported there won’t be a substantial price decline among their used cars.
“Cruise control is not widely used in Korea and since the faulty part doesn’t seem to seriously hinder safety or performance, there seems to be limited impact in the used car market,” said Choi Hyun-seok, a marketing director at SK Encar. “Especially for models like Avante [Elantra overseas], Santa Fe and Sorento that are popular in the used car market, the price will not be much affected.”
However, Choi said imported used car prices will be more sensitive to recalls since most consumers who buy foreign cars care about brand image.
This hints that there may be a decline in price for some Japanese used car models. On Thursday, six automakers, including Japanese giants Toyota, Nissan and Honda, also said they are recalling more than 3.4 million vehicles worldwide for possibly defective passenger side air bags that might catch fire or injuring passengers by propelling pieces of plastic when inflating.
When Toyota suffered its massive recall in 2010, used car prices went down by as much as 4 million won ($3,540) in Korea. The situation was made worse because it was directly related acceleration problems and linked to several accidents.
“Consumers are paying a high price for imported cars, but who would want to buy a car brand that has a negative image?” Choi said.
However, Choi added that consumers should also change their negative perception about recalls, considering the fact that automobiles are manufactured with thousands of parts.
“There could be mechanical errors happening, but what’s important is that automakers admitting the problem and voluntarily recalling the models to fix problems. That should raise creditability among consumers.”
By Joo Kyung-don [firstname.lastname@example.org]
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