Toyota Fallout: Hyundai Halts Sonata Sales
By Michelle Krebs February 24, 2010As part of the obvious fallout of Toyota's problems with vehicle recalls and humiliating 
Congressional hearings, Hyundai Motor Co. announced in Korea Wednesday that it would temporarily stop selling its much ballyhooed 2011 Hyundai Sonata to fix a faulty door latch.
Hyundai said the problem affects 1,300 cars that have been bought by customers and 4,000 cars on dealership lots in the U.S.; it affects 47,000 vehicles globally as the Sonata is one of Hyundai's bestsellers, the other being the Elantra.
Hyundai's quick action on the problem, brought to its attention by customers with no reports of accidents or injuries, is an obvious effort to prevent happening to Hyundai what happened to Toyota. Toyota is accused of foot-dragging in recalling problem vehicles and is an enduring a public lashing in Congress this week.
The company said the hinge can stick in an open position so that the doors won't close. The problem occurs in a very specific situation -- a rare one, the company insists -- when the door handle is pulled while the lock is held down.
Hyundai said new door hinges are arriving in U.S. dealerships now, customers are being notified to return them for repair, which takes an hour, and sales will resume by week's end. The automaker is notifying safety agencies in South Korea as well as the National Highway Traffic Safety Administration (NHTSA) in the U.S., which currently is under intense fire for not holding Toyota more accountable.
Despite Hyundai's fast response, the stock market reacted. The automaker's announcement caused its stock to fall in early morning trading, surely a sign of overreaction.
The highly praised Sonata, which competes against the troubled Toyota Camry, went on sale in Korea in the fall and in the U.S. last month. It is built in Korea but also at Hyundai's plant in Alabama.
The midsize sedan, which later gets a hybrid powertrain, is a pillar of Hyundai's ambitious growth plans -- to increase global sales this year by 11 percent to 3.46 million and to capture 4.5 percent of the U.S. market.
In Congressional testimony, Toyota executives said growth caused the automaker to lose sight of the customer -- another lesson Hyundai might want to learn from its competitor. -- Michelle Krebs, Senior Analyst and Editor at Large
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This is why Hyundai can do no wrong. Any variation in stock price will be soon overlooked. Toyota, however, is going to hurt for years.
I think every car maker is going to watch out carefully for any faulty safety issue due to the lack of sales. As for Toyota, they will rebound within a year.
Probably a good day to buy Hyundai stock. I'd hold off on buying Toyota stock for a while, though.
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