Hyundai Motor and Kia Motors’ U.S. units on Friday agreed to a record $210 million civil penalty following the statement by U.S. auto safety regulators that the automakers failed to recall 1.6 million vehicles for engine issues in a timely fashion.
The U.S. agency National Highway Traffic Safety Administration (NHTSA) said the two affiliated Korean automakers agreed to consent orders after it said they had improperly reported some details to the agency regarding the recalls.
Hyundai agreed to an overall civil penalty of $140 million, including an upfront payment of $54 million, an obligation to spend $40 million on safety performance measures, and an extra $46 million deferred penalty if it does not satisfy requirements.
Kia’s civil penalty totals $70 million, including an upfront payment of $27 million, requirements for spending $16 million on specified safety measures, and a possible $27 million deferred penalty.
“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,” said James Owens, the NHTSA Deputy Administrator.
The settlement covers recalls in 2015 and 2017 for manufacturing concerns that could result in bearing wear and engine failure.
As part of the settlement, Hyundai is spending $40 million for building a safety field test and inspection laboratory in the United States and putting new IT systems to better analyze safety data.
“We are taking immediate action to enhance our response to potential safety concerns,” said Brian Latouf, chief safety officer, Hyundai Motor North America.
Kia said it denied the allegations but has accepted to settle the matter to avoid a protracted dispute with the government. The automaker also agreed to restructure and move the departments responsible for recall determinations to the country.
