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Hyundai, Kia probed by US for cars that led to four deaths

Shares of Hyundai declined as much as 4.8 per cent, the biggest intraday drop in almost two months, and were down 3.5 per cent at 925am in Seoul.

[NEW YORK] Safety regulators in the US are investigating airbags in certain Hyundai and Kia vehicles that failed to deploy in frontal collisions linked to four deaths and six injuries.

As many as 425,000 vehicles made by the South Korean manufacturers may be affected, according to an investigation report posted on the US National Highway Traffic Safety Administration's (NHTSA) website. NHTSA is investigating whether vehicles made by other carmakers also may be at risk. Hyundai and Kia shares fell.

The crashes involve Hyundai Sonatas and Sonata hybrids made in 2011, and Kia Forte and Kia Forte Koups made in 2012 and 2013. Hyundai on Feb 27 recalled almost 155,000 Sonatas after determining that an electrical overstress failed to inflate the airbags during collisions. Hyundai is looking into the product supplier, ZF-TRW, for a possible cause for the electrical problem.

Airbags already are linked to the largest and most complex auto-related recall in US history - the one that ultimately led to Japan's Takata Corp to seek court protection from creditors after its devices were linked to at least 17 deaths. Unlike the Takata situation, which involved exploding airbags with shrapnel, the latest probe involves devices that failed to deploy at all.

Shares of Hyundai declined as much as 4.8 per cent, the biggest intraday drop in almost two months, and were down 3.5 per cent at 925am in Seoul. Kia lost as much as 2.8 per cent.

The federal agency said it will work to determine whether any other carmaker use airbag control units that are the same or similar to those supplied by ZF-TRW, and whether those units behave the same way in similar crashes. A safety specialist said that's critical to determining how widespread the problem is and whether it's just a Hyundai and Kia issue.

"If there is a component in the module that is used by other systems as well, that number could increase significantly," Keith Friedman, automotive safety researcher at Friedman Research Corp in Austin, Texas, said on Sunday.

"If it has to do with the way this particular module has been manufactured, it could be localised to these particular vehicles."

The Korean companies said they're cooperating in the probe. Hyundai Motor Co is "announcing this recall now to ensure the safety of our customers", the company said in a statement. Kia Motors Corp said it will work closely with NHTSA, including monitoring crash reports and conduct more crash tests as needed.

ZF TRW was formed when closely held German company ZF Friedrichshafen AG bought US-based TRW Automotive Holdings Corp for more than US$12 billion in 2015.

Takata last month agreed to pay as much as US$650 million to settle claims in 44 states and the District of Columbia for defective airbags that can explode in car crashes, sending metal shards flying. The company has recalled millions of airbags, the largest in history, that had been linked to the deaths and spurred lawsuits leading to more than US$1 billion in settlements from carmakers including Honda Motor Co, Toyota Motor Corp, Subaru Corp, Mazda Motor Corp, Nissan Motor Co and Bayerische Motoren Werke.

Last week, US consumers filed class-action complaints in Miami federal court to recover costs against units of General Motors and Volkswagen as well as Daimler's Mercedes-Benz and Fiat Chrysler. The complaints allege that the carmakers deceived the public about the defects and associated dangers.