Hyundai and Kia fined for delaying engine failure recalls

Hyundai and Kia must pay $137 million in fines and safety improvements because they moved too slowly to recall more than 1 million vehicles with engines that can fail.

The National Highway Traffic Safety Administration announced the penalties on Friday. They resolve a three-year government probe into the companies’ behavior involving recalls of multiple models dating to the 2011 model year.

“It’s critical that manufacturers appropriately recognize the urgency of their safety recall responsibilities and provide timely and candid information to the agency about all safety issues,” NHTSA Deputy Administrator James Owens said in a statement.

Hyundai will pay $ 54 million and invest $ 40 million to improve safety operations under an agreement reached with the agency. The company must build a field test and inspection laboratory in the U. S. and put new computer systems in place to analyze data to identify safety issues. Another $ 46 million in penalties will be deferred as long as the Korean automaker meets safety conditions, NHTSA said in a prepared statement.

Kia, which is affiliated with Hyundai, must pay $ 27 million and invest $ 16 million on safety performance measures. Another $27 million payment will be deferred as long as Kia behaves.

Kia will set up a U. S. safety office headed by a chief safety officer. Both companies will have to hire an independent third- party auditor to review their safety practices, and they committed to organizational improvements to identify and investigate potential U.S. safety issues.

“We value a collaborative and cooperative relationship with the U.S. Department of Transportation and NHTSA, and will continue to work closely with the agency to proactively identify and address potential safety issues,” Brian Latouf, Hyundai’s chief safety officer, said in a prepared statement.

Kia denied the allegations from the U. S. but said Friday that it wanted to avoid a protracted legal fight.

“We are pleased to be able to direct our attention to improving and enhancing our recall management processes, and our priority remains making things right for our customers,” the company said in a prepared statement.

The U.S. safety agency opened its probe in 2017 after Hyundai recalled about 470,000 vehicles in September of 2015 because debris from manufacturing could restrict oil flow to connecting rod bearings. That could make the bearings wear out and fail, potentially causing the four-cylinder engines to stall or catch fire. The repair was an expensive engine block replacement.

NHTSA said in investigation documents that Hyundai limited the recall to engines made before April of 2012, saying it solved the manufacturing problem after that. In addition, Kia didn’t recall its cars and SUVs with the same 2.4-liter and 2-liter “Theta II” engines, contending they were made on a different assembly line at a plant in Alabama.

But 18 months after the 2015 recall, both automakers announced recalls of 1.2 million more vehicles for the same problem, including models the automakers originally said weren’t affected, NHTSA said when it opened the investigation.