Hyundai, Kia Reach $210 Million Settlement With NHTSA Over Engine Recalls

Hyundai, Kia Reach $210 Million Settlement With NHTSA Over Engine Recalls
Hyundai Sonata Engine
Credit: Hyundai.

Hyundai and Kia must pay $210 million in penalties in a settlement reached with the National Highway Traffic Safety Administration related to recalls of vehicles equipped with Theta II engines. The NHTSA found that the automakers, owned by parent company Hyundai, failed to conduct timely recalls of over 1.6 million vehicles equipped with these engines. The agency says they also didn�t accurately report certain information.

Note: There are separate Hyundai/Kia engine investigations involving non-crash engine fires that are ongoing and unrelated to this settlement.

Hyundai

Hyundai�s recalls involved 2015 and 2017 recalls of 2011-2014 Sonata and 2013-2014 Santa Fe Sport vehicles. Hyundai says these recalls addressed manufacturing issues that could lead to bearing wear and engine failure. The NHTSA says Hyundai is subject to a total civil penalty of $140 million which includes a cash penalty of $54 million. The automaker must also make investments of $40 million to improve its safety operations and be subject to a possible deferred payment of $46 million dependent upon Hyundai�s compliance with a NHTSA Consent Order. The investments in its safety operations include building a safety field test and inspection laboratory in the U.S. and implementing new IT systems to better analyze safety data and identify potential safety issues.

In a statement, Hyundai said:

�Customer safety is our highest priority and we are taking immediate action to enhance our response to potential safety concerns,� said Brian Latouf, chief safety officer, Hyundai Motor North America. �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. We are committed to a best in class U.S. safety office.�

Kia

Under the Kia consent order, the company is subject to a total civil penalty of $70 million. This includes an upfront payment of $27 million, an obligation to expend an additional $16 million on specified safety performance measures, and an additional $27 million deferred penalty that may become payable if specified conditions are not satisfied. The Kia consent order is for two years, with an option for NHTSA to extend the order for an additional year if warranted.

Read the entire NHTSA Press Release below:

November 27, 2020 - The National Highway Traffic Safety Administration today announced consent orders with Hyundai Motor America, Inc. and Kia Motors America, Inc. related to recalls for vehicles equipped with Theta II engines. The combined penalties amount to $210 million.

The consent orders reflect the agency�s assessment that both Hyundai and Kia conducted untimely recalls of over 1.6 million vehicles equipped with Theta II engines, and inaccurately reported certain information to NHTSA regarding the recalls.

The consent orders establish both monetary and non-monetary measures designed to enhance each company�s safety practices. In addition to monetary penalties, Kia will be creating a new U.S. safety office headed by a Chief Safety Officer, and Hyundai will be building a U.S. test facility for safety investigations. Both companies will develop and implement sophisticated data analytics programs to better detect safety-related concerns. Under the agreements, each company will retain an independent, Third-Party Auditor, who will directly report to NHTSA. Each Third-Party Auditor will conduct a comprehensive review of the company�s Safety Act practices and compliance with the consent order. Both companies also committed to substantial organizational improvements to enhance their ability to identify and investigate potential safety issues in the United States, as well as facilitate consistent and transparent communication with NHTSA.

�Safety is NHTSA�s top priority,� said NHTSA Deputy Administrator James Owens. �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.�

Under the consent order, Hyundai is subject to a total civil penalty of $140 million. This includes an upfront payment of $54 million, an obligation to expend an additional $40 million on specified safety performance measures, and an additional $46 million deferred penalty that may become payable if specified conditions are not satisfied. The Hyundai consent order is for three years, with an option for NHTSA to extend the order for an additional year if warranted. Under the Kia consent order, the company is subject to a total civil penalty of $70 million. This includes an upfront payment of $27 million, an obligation to expend an additional $16 million on specified safety performance measures, and an additional $27 million deferred penalty that may become payable if specified conditions are not satisfied. The Kia consent order is for two years, with an option for NHTSA to extend the order for an additional year if warranted.These consent orders do not affect separate, ongoing investigations by NHTSA�s Office of Defects Investigation regarding allegations of non-crash fires in certain Hyundai and Kia vehicles, some of which are equipped with Theta II engines.

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