At 4 p.m. on the 13th, a regional headquarters of Hyundai Motor received an urgent directive from the domestic business division at headquarters. It was highly unusual to suddenly pull a flagship sales model that had been on display at all stores for more than a year. The headquarters official said it was "a decision by the group's top management," gave no further reason, and stressed that there would be severe personnel action if the directive was not carried out swiftly.
That was not the only directive from headquarters. That day, deliveries of Palisades slated for customers at sales outlets were also halted at Hyundai Motor's nationwide vehicle yards. Headquarters also did not clearly explain why shipments were suspended, according to reports.
Questions were answered only on the morning of the 14th. Multiple foreign media outlets, including Reuters, reported that Hyundai Motor decided to halt sales and conduct a voluntary recall of certain Palisade models in the United States and Canada. That was because a fatal accident involving a power seat occurred in the United States.
◇ Power-seat entrapment accident in Palisade sold in U.S.
According to Hyundai Motor and foreign media on the 17th, the Palisade's defect occurred in the rear-row power seats. Reuters reported that in Ohio, a 2-year-old child was trapped and died in a folding power seat. When a power seat folds, the vehicle should detect a person in the seat and stop operation, but it was reported that the Palisade's function did not work properly, leading to the fatal accident.
However, the specific circumstances of the fatal accident have not yet been determined. Reuters reported only that Hyundai Motor said it "has not yet identified the full circumstances of the accident and an investigation is underway." The National Highway Traffic Safety Administration (NHTSA) also did not comment on the accident.
Some bloggers in the United States said the accident occurred in the third row. But a Hyundai Motor official drew a line, saying, "The North American organization is investigating this accident, and the exact reason or circumstances have not yet been identified."
The Palisade is Hyundai Motor's flagship large SUV. It debuted in December 2018, and the model currently on sale is the second generation, launched in January last year. After the first-generation Palisade underwent a facelift in April 2022, a full-change model was released in just 2 years and 8 months.
Some higher trims of the Palisade are equipped with power seats that can fold the second and third rows with a button. Pressing the button located on the left side of the cargo space behind the third row lets you select either the second or third row to fold.
In the North American market, the Palisade Limited and Calligraphy trims come standard with this feature, and in Korea, the Calligraphy trim includes it as standard. In Korea, the Prestige trim, which is just below Calligraphy, includes the power-seat feature as an option.
Power folding seats have recently been installed in SUVs from multiple brands. Higher trims of Ford's Explorer, General Motors (GM)'s Traverse, and Toyota's Grand Highlander include this feature. At Hyundai Motor, in addition to the Palisade, the Santa Fe and Ioniq 9 offer a power-seat function. The Telluride, Kia's North America model built on the same platform as the Palisade, is also equipped with this feature.
A Hyundai Motor official said, "Even if power folding seats are installed in the same way, the operating methods or principles differ by model," adding, "So far, no defects have been found in vehicles other than the Palisade."
◇ Management accountability raised internally… "Didn't allow sufficient time for development and verification"
After the accident, posts pointing to management's responsibility have been steadily appearing on office worker communities, mainly from employees in research and development (R&D) organizations such as the Namyang Research Center.
One Hyundai Motor employee argued, "Shortening the vehicle development period and reducing test vehicles prevented verification of all specifications, which caused the defect." Another employee wrote, "Sufficient development time was not guaranteed and unverified technology was applied," adding, "The product and sales division, which pushed to forcibly apply new-technology specifications, bears significant responsibility."
Some R&D employees in particular took issue with management shortening the Palisade's SOP (Start of Production) period. SOP refers to the initial mass-production procedure to conduct final verification of each function before full-scale mass production after a new vehicle's development is completed.
They argued that although a sufficient SOP process should have been undertaken to identify the remaining issues in detail, management moved up the launch timing of the new Palisade, failing to catch this power-seat defect.
◇ Sales of the "cash cow" halted… warning lights for Hyundai Motor's performance improvement
The Palisade is one of Hyundai Motor's few "cash cow models" amid recent sluggish sales. While Hyundai Motor's cumulative sales through last month this year fell 5.9% year over year to 97,216 units, the Palisade rose 26.9% to 8,075 units.
In particular, as a large SUV with various options, it is more profitable than other models, and many say it has played an important role in helping Hyundai Motor defend its performance.
This vehicle has also been cited as a representative bestseller for Hyundai Motor in global markets. The Palisade's global sales last year reached 211,215 units, up 27.4% from a year earlier. That was the highest annual sales since its first launch in 2018. Last month, it was also selected as a winner in the utility category of the 2026 North American Car of the Year.
Hyundai Motor said it will recall 74,964 vehicles in North America due to the Palisade power-seat fatal accident. In Korea, 57,474 units are included, bringing the total recall in the two countries alone to about 132,000 vehicles.
As sales of trims equipped with power seats are expected to be suspended for the time being, there are forecasts that Hyundai Motor may struggle to achieve its annual sales target.
However, some in financial markets say the expense loss from the recall may not be large. In a report published on the 16th, Daishin Securities said, "If the function is improved early through an over-the-air (OTA) software update, the impact on earnings and corporate value will be limited."
But in the auto industry, some point out that Hyundai Motor failed to respond in time even as concerns about the power-seat defect continued, and that it has become difficult to avoid damage to brand value given the issue ultimately led to a fatal accident.
An official at a complete vehicle manufacturer said, "Pointed criticism that the Palisade's power seats fold without properly detecting occupants in the second and third rows has been persistently raised for a year by domestic and overseas YouTubers and experts." The official added, "Hyundai Motor kept ignoring it, and it ultimately led to a fatal accident, recall, and sales suspension," and "its reliability in global markets has taken a serious hit."