South Korea's Hyundai Motor has stopped U.S. sales of its 2011 Sonata sedan due to door lock issues, sending its shares down more than 4 percent on concerns it could become snared in a damaging recall crisis like Japanese rival Toyota Motor Corp.

Hyundai notified dealers late on Monday of potential faults in the front-door latches of the new model that could affect 5,000 vehicles, and the stop-sale order was put into effect at U.S. dealers on Tuesday, a spokesman said.

But analysts drew a line between Toyota's recall woes and Hyundai's decision to suspend sales of the revamped Sonata, contrasting their handling of the problems.

We were startled by news that the new Sonata, which people have pinned high hopes on, also had flaws, said Lee Seong-jae, a Kimwoo Securities analyst in Seoul.

But investor reaction is emotional. Hyundai has already found the defect and has started to ship replacement parts, unlike Toyota which appears to have been unclear about the causes of its defects since late last year.

Toyota has recalled more than 8.5 million vehicles globally in recent months for problems including sticky accelerators, loose floor mats and a braking glitch across its model range.

The mass recall had prompted analysts to say consumers may shift from Toyota cars to more affordable Hyundai models.

The Japanese automaker is also investigating reports of steering problems in the Corolla, its second-most popular U.S. model.

Shares in Hyundai Motor fell as much as 4.3 percent in early Wednesday trading and were down 2.6 percent at 114,000 won by 0247 GMT, versus a 1 percent drop in the wider market.


About 1,300 of the 2011 Sonata sedans built from December through February 14 at Hyundai's plant in Alabama were sold to customers. The company said it received complaints from customers but no reports of accidents or injuries related to the model.

It said dealers would inspect vehicles, and a repair, if needed, would take about an hour.

analysts say the new Sonata will be the lynchpin in Hyundai's efforts to achieve its growth targets this year, but played down the possibility of any serious dent to U.S. sales due to the sales suspension.

Hyundai was the only major automaker to increase sales in the battered U.S. market last year.

The South Korean automaker is targeting 4.5 percent market share in the United States this year, helped by popular new product launches and aggressive marketing.

The world's No.4 carmaker with affiliate Kia Motors Corp plans to launch the new Accent and a revamped Elantra this year, which competes against the Corolla and Honda's Civic.

With the new models, Hyundai aims to increase global sales in 2010 by 11 percent to 3.46 million vehicles.

Hyundai's U.S. sales rose 8.3 percent to 435,064 units in 2009, while industrywide U.S. sales fell 21 percent. Its U.S. market share increased to 4.2 percent from 3 percent in 2008.

(Additional reporting by Cheon Jong-woo and Rhee So-eui; Editing by Jonathan Hopfner and Ian Geoghegan)