Setting aside 2.9 trillion won ($2 billion USD) in Q3, Hyundai and Kia aim to resolve issues related to faulty Theta GDI engines.
According to information from Bloomberg, Hyundai has allocated $900 million USD for this purpose, representing 44% of the automaker’s anticipated third-quarter profits. Meanwhile, Kia has earmarked an additional $1.1 billion, which accounts for 66% of its expected profits for this quarter.
Collectively, Hyundai and Kia have been grappling with challenges related to Theta GDI engines for an extended period, especially in the case of the 2.0-liter and 2.4-liter Theta II models. The root cause of these problems predominantly lies in manufacturing defects within the crankshafts. Residual metallic shavings and burrs from the crankshaft milling process were inadvertently left behind, subsequently infiltrating the engine’s oil passages.
Over time, these substances can obstruct oil circulation to certain engine components, leading to accelerated deterioration and eventual bearing malfunctions. Approximately 2.4 million Hyundai vehicles and 1.8 million Kias could potentially be impacted by these complications, posing significant challenges for the manufacturers.
A legal action has been initiated against the companies, encompassing various Hyundai and Kia models produced between 2011 and 2019. Consequently, numerous owners of these vehicles are now eligible for a complimentary engine replacement in the event of any issues.
The manufacturers are facing a situation where more owners are opting for engine replacements than initially anticipated. The costs associated with new engines, not to mention the labor required for installation, are substantial. When compounded by existing supply chain constraints and the depreciation of the Korean currency, warranty expenses for the companies have soared significantly.
For years now, both Hyundai and Kia have incurred considerable expenses due to this issue. Apart from warranty outlays, the companies have also been fined millions for neglecting recalls of faulty vehicles.
Given the magnitude of vehicles involved, it is no surprise that Kia and Hyundai are reserving substantial sums to address repair costs. Fortunately for consumers, efforts are underway to rectify the problem.
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