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| January 8,
2002 Section: News Edition: 1 Page: Cover Memo: hyundai.0108 CHRIS KNAP and ELIZABETH AGUILERA |
| Nearly 300 engines built in Korea and installed in 2001 Santa Fes shipped to the United States have seized and failed, sparking a multimillion- dollar effort by the Fountain Valley-based distributor to quickly repair the cars and make other concessions to keep customers happy. Detailed lists of the V-6 engine failures show that cylinder liners cracked or slipped inside the block on Santa Fes with as few as 18 miles, in one case while a prospective customer was on a test drive. When that happens, the piston slams the loose metal against the cylinder head and the engine is destroyed. Other engines went 1,000 to 12,000 miles before failing -- frequently while owners were driving at freeway speeds, the documents show. ``The engine failed at 1,600 miles. It just bucked a little bit and then stopped. We had to coast from the center lane over to the shoulder on (Interstate) 80. We were lucky there wasn't much traffic,'' said Lorraine Chatterton of Petaluma. ``We had 3,000 miles (on the car) and the engine stopped,'' said Alyce Breshears, 66, of the Fresno County town of Sanger. ``When it happened I said my Hail Marys that we were not out on the highway and that I was not alone. Thank God I don't have small babies.'' It is not known if the engine failures resulted in any crashes or injuries. The company said no one had been injured when the engines failed. The failures could be particularly embarrassing for the Korean company, which has tried to shed its former image of poor workmanship and reliability, auto-marketing experts said. The Santa Fe, in particular, has been hailed as a quality product and helped Hyundai to outsell Japanese rivals Mitsubishi and Mazda last year. Federal law requires manufacturers to report within five days of discovery any defect that could be a safety hazard. Hyundai officials have known about the problems since November 2000. But they have not reported the problem to the National Highway Traffic Safety Administration. The full extent of the problem is unclear. ``They are obligated to tell us as soon as they realize they've got a problem,'' said Liz Neblett, a spokeswoman for NHTSA. ``It's very possible that the Office of Defect Investigation would consider this a safety hazard. We'd love to hear about what happened from Hyundai owners.'' Chuck Halper, vice president of service for Hyundai Motor America, confirmed that there have been 290 engine failures since November 2000, plus as many as six failures of replacement engines. Halper said Hyundai did not report the problems to NHTSA because the company doesn't believe it is a safety issue. ``We looked at it very carefully to make sure it was not a safety or emissions-related issue. That was in association with our parent company (Hyundai Motor Co.) and our engineering and legal community.'' But automotive experts contacted by the Register did not agree. ``They should announce it, because somebody out there could have a failure going down the freeway. Losing power at speed in the middle of traffic is dangerous,'' said Gordon Wangers, managing director of Automotive Marketing Consultants Inc., of Vista. ``You could warn consumers to be wary, to put it in neutral and coast over if a failure does occur. They should have some communication with customers.'' Hyundai data documenting the failures show that the engines involved were installed in cars manufactured in Korea between July and November of 2000. Halper said the company discovered the problem in November 2000 and switched to a thicker liner. He said none of the new engines had failed. The six replacement engines failed because technicians did not clean all the metal debris out of engine manifolds and plumbing before installing new engines, he said. Halper characterized the failures as a very small percentage of the 66,000 Santa Fes sold by Hyundai, and said the company has no plans to notify either NHTSA or Santa Fe owners. ``Keep in mind that the defect rate is very low,'' Halper said. ``I wouldn't know what to tell (owners). I might also tell them there is a problem that your CD player might jam.'' Hyundai officials said they did not know how many affected Santa Fes were sent to the United States, but that the company sold about 7,000 V-6 Santa Fes in the United States in 2000. The officials acknowledged that some of the early models were likely sold in 2001. In addition to paying for one, and sometimes two new engines at $4,500 apiece, documents show the company has made owners' monthly payments, given them tow hitches or stereos, upgraded them to Hyundai's XG300 luxury car, or bought them out. ``This is an important investment these customers have made; they put the confidence in our brand,'' Halper said. ``We thought this was an opportunity to show we stand behind our product.'' Wangers and other auto consultants praised Hyundai for doing the right thing for customers who have experienced the engine failures. ``Hyundai has made huge (quality) strides in recent years. I wouldn't say this is reason to say the sky is falling on Hyundai vehicles. All manufacturers have these problems,'' Wangers said. But he added, ``This is a pretty big problem. It's particularly sensitive in Hyundai's case because there are still a lot of people who remember their previous reputation for bad quality. From a public relations standpoint, it could be unfavorable for this to get out.'' After coming to this country with a splash 16 years ago, Hyundai was damaged by reliability problems with the Excel compact. In 1987, the company sold 263,610 cars in the United States. By 1998, sales were down to 90,000, and the company was laying off U.S. employees. Hyundai's U.S. executive, Finbarr O'Neill, called it ``a disaster.'' Starting in 1999, Hyundai countered those perceptions by offering a 10-year, 100,000-mile warranty and snappy ads advertising ``A decade of dependability.'' The company's sales have since exploded. Last year the company sold 346,235 vehicles in the United States, a 42 percent increase over 2000, putting it seventh in U.S. sales, ahead of Mitsubishi, Mazda and Mercedes. More than 56,000 of those vehicles were Santa Fe SUVs, a new category for Hyundai. The Santa Fe is a mini-SUV, built on a car chassis. It competes with the new Ford Escape and Mazda Tribute, the Toyota RAV4, and the Honda CRX. The Santa Fe has been well- received by customers and recently earned first place by AutoPacific, the Santa Ana auto-marketing consultants, in owner satisfaction when pitted against the Toyota, the Honda and seven other compact SUVs. But Hyundai's quality problems aren't all behind them. Last year Hyundai had to recall more than 150,000 Accents, Elantras, Sonatas, Tiburons and XG300 luxury sedans for faults ranging from defective air bags to throttle controls, and ignition faults that could stall the car at speed. Every year, manufacturers announce hundreds of recalls affecting millions of vehicles. Hyundai is not be the first automaker to resist a recall. Ford Motor Co. battled federal regulators in court for years in an effort to stop a recall of 12 million vehicles that could stall because of a flawed ignition system. Ford finally settled the case, agreeing to reimburse owners of 29 models of cars and trucks built between 1983 and 1995. Some Santa Fe owners contacted by the Register said the engine failures and other problems that have cropped up since then have made them wary of the SUV they once loved. Breshears said she and her husband ``sweated it out'' on their first trip to the coast after getting a new engine installed. ``We got back just fine, but then later the little red engine light came on and we had to take it in five times to get that fixed.'' Hyundai offered to pay one $500-plus monthly payment and special-ordered a dash cover for their car. But Breshears still worries about reliability. ``I couldn't ask for a better air conditioner, heater or leather seats,'' she said. ``I really thought that for the money we were getting an excellent buy, but it's just the mechanical problems we've had ... to me they really let us down.'' Contact Knap at 714-796-2240 or cknap@ocregister.com Contact Aguilera at 714-796-6749 or eaguilera@ocregister.com |
Alyce and Bob Breshears of Sanger were driving their 2001 Hyundai Santa Fe when the engine failed. The engine was replaced Sanger residents Alyce and Bob Breshears had 3,000 miles on their Santa Fe when the engine locked up. The engine was replaced but experienced more problems |
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Copyright 2002 The Orange County Register |
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