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Why BMWs are cheaper than Hyundais in Korea

Bloomberg reports shifting tariff regulations have upended the traditional automotive pecking order in Korea. Thanks to cheaper import taxes, foreign brands have seen market share jump from 28 percent to 41 percent over the last two years. BMW, Mercedes-Benz and Audi have all capitalized on the shift, with domestics like Hyundai and Kia suffering at the hands of their German rivals.
Taxes on European imports have fallen from 8 percent in 2011 to just 3.2 percent today. Over the next few years, tariffs will all but be eliminated for most imports, and taxes on US-made vehicles are expected to fall to just 4 percent in 2014. By 2016, that number will be zero. Needless to say, Hyundai and Kia are concerned about the shift.
Hyundai has seen profit fall by 15 percent last quarter, and the company says it is on pace to see the slowest sales growth since 2007. The company's shares have fallen by 12 percent. In order to stem the losses, Hyundai has discounted its midsize sedans and started working on diesel engine options.

Submit your questions for Autoblog Podcast #317 LIVE!

We record Autoblog Podcast #317 tonight, and you can drop us your questions and comments regarding the rest of the week's news via our Q&A module below. Subscribe to the Autoblog Podcast in iTunes if you haven't already done so, and if you want to take it all in live, tune in to our UStream (audio only) channel at 10:00 PM Eastern tonight.
Discussion Topics for Autoblog Podcast Episode #317
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Feds open investigation into recall of 1.7M Hyundais, Kias

US safety regulators have opened a formal investigation into the recall of nearly 1.7 million vehicles by Hyundai and affiliate Kia over engine defects, according to filings published Saturday. A South Korean whistleblower reported concerns last year to the National Highway Traffic Safety Administration (NHTSA), which will probe the timeliness of three recalls carried out in the United States and whether they covered enough vehicles. Fines could be imposed on the automakers if the NHTSA determines the recalls were not conducted properly. The agency did not immediately comment on the probe. A Hyundai spokesman in Seoul the company "has conducted recalls in compliance with US regulations and procedure" and will "sincerely" cooperate with the investigation. In 2015, Hyundai recalled 470,000 U.S. Sonata sedans, saying engine failure would result in a vehicle stall, increasing the risk of a crash. At that time, affiliate Kia did not recall its vehicles, which share the same "Theta II" engines. Kim Gwang-ho, then an engineer at Hyundai, flew to Washington in August 2016 to tell NHTSA the companies should have recalled more vehicles over the problem, citing an internal report. He also reported several alleged safety lapses to both U.S. and South Korean authorities. On March 31, Hyundai expanded its original U.S. recall to 572,000 Sonata and Santa Fe Sport vehicles with "Theta II" engines, citing the same issue involving manufacturing debris, the NHTSA said. On the same day, Kia also recalled 618,160 Optima, Sorento and Sportage vehicles which use the same engine. The recall, which was also conducted in Canada and South Korea, cost the duo 360 billion won ($322.40 million). "TIMELINESS AND SCOPE" According to the filings published Saturday, the agency opened a probe May 18 into "both the timeliness and scope" of the "Theta II" engine recalls and their "compliance with reporting requirements." In August 2014, Hyundai agreed to pay a $17.35 million fine to settle a NHTSA investigation it delayed the recall of 43,500 Genesis cars to fix a brake defect linked to two injuries. NHTSA said in 2014 Hyundai "must change the way they deal with safety-related defects." Hyundai vowed to make improvements to how it handled safety issues after the fine. In 2015, the company retained former U.S. Transportation Secretary Ray LaHood as an adviser on safety issues.