NewKerala.com

Hyundai, Kia Suppliers Fined $1.75M for Bid-Rigging Collusion

South Korea's Fair Trade Commission has fined two suppliers a combined 2.59 billion won ($1.75 million) for colluding to rig bids for interior surface treatment contracts with Hyundai Motor and Kia. SM Hwajin and Cubic Korea prearranged winners and prices in five tenders between 2020 and 2023 for models like the Kia Sportage and EV9, and Hyundai's Santa Fe. The FTC noted the collusion may have impacted production costs for major SUVs, though a direct link to consumer prices wasn't analyzed. The penalty comes as Hyundai and Kia are projected to report significant declines in first-quarter operating profit due to external economic pressures.

Key Points: $1.75M Fine for Hyundai, Kia Supplier Bid Collusion

  • $1.75M fine for bid-rigging
  • Collusion on 5 SUV models including EV9
  • May have affected consumer prices
  • Hyundai, Kia face Q1 profit decline
2 min read

2 local suppliers fined $1.75 million for colluding in Hyundai, Kia bids

South Korea fines two suppliers $1.75M for rigging bids on Hyundai & Kia SUV interiors. FTC cites collusion on models like Sportage & EV9.

"prearranged winners and bid prices in five tenders - Fair Trade Commission"

Seoul, April 22

The antitrust regulator here said on Wednesday it has decided to fine two local suppliers to Hyundai Motor and Kia, a combined 2.59 billion won for colluding to rig bids.

SM Hwajin and Cubic Korea prearranged winners and bid prices in five tenders conducted between September 2020 and April 2023 to select contractors for surface treatment of vehicle interior materials, according to the Fair Trade Commission (FTC).

The two companies were the only registered bidders eligible for tenders by the two carmakers using the "hydrographic printing" method for interior surface treatment, reports Yonhap news agency.

The firms colluded in bids for five new vehicle models, including the Sportage, EV9, Santa Fe, EV3 and Palisade, with contracts awarded as agreed between them.

The FTC imposed a fine of 1.63 billion won on SM Hwajin and 959 million won on Cubic Korea for their violation of the monopoly regulation and fair trade act.

The bid rigging is suspected to have affected production costs or retail prices of major sport utility vehicles (SUVs), though the FTC said it has not conducted an analysis on whether the collusion directly led to higher consumer prices.

Last year, SM Hwajin reported around 18.5 billion won in sales, while Cubic Korea posted 227.2 billion won.

Meanwhile, Hyundai Motor and Kia are expected to report lackluster first-quarter earnings compared with last year due to the effects of US tariffs and a weaker Korean won, a market analysis showed.

According to the analysis of earnings forecasts from securities firms compiled by Yonhap Infomax over the past three months, Hyundai Motor is estimated to report sales of 45.89 trillion won ($30.4 billion) on average for the January-March period and an operating profit of 2.78 trillion won in its earnings report expected to be released on Thursday.

The projected sales figure represents a 3.3 percent increase, while operating profit marks a 23.3 percent decline.

Its sister Kia is estimated to report 29.62 trillion won in sales and 2.32 trillion won in operating profit, which would mark a 5.7 percent on-year growth and a 22.6 percent decline, respectively, on Friday.

- IANS

Share this article:

Reader Comments

P
Priya S
Very disappointing. Hyundai and Kia are popular brands here in India. To think the cost of our favourite SUVs like the Sportage might have been inflated because of such practices is upsetting. Companies should have more integrity.
R
Rohit P
The article says the FTC hasn't analysed if this led to higher consumer prices. That's the most important part! They should investigate that properly. The common car buyer in India or anywhere ends up paying for these corporate games.
S
Sarah B
Respect to the Korean regulator for catching this and taking action. Transparency in tenders is crucial for a healthy market. I hope the Indian companies supplying to these automakers here are operating fairly.
V
Vikram M
Collusion between only two bidders is so easy to do. Hyundai/Kia should have invited more suppliers to bid, even if they had to look internationally. This lack of competition hurts their own bottom line too, as seen in their projected profit decline.
K
Karthik V
A fine is good, but what about compensation for the carmakers who overpaid? And what about the end customers? The system needs to have provisions to recover the ill-gotten gains and return them. Otherwise, it's just a cost of doing business for these firms.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50