Hyundai, Kia penalized $210 million for failing to timely implement recall order

The US units of Hyundai Motor Co and Kia Motors agreed to a record $210 million civil penalty after failing to timely recall 1.6 million vehicles in 2015 and 2017 for manufacturing issues that could lead to bearing wear and engine failure.

According to the US National Highway Traffic Safety Administration (NHTSA), the two affiliated Korean automakers agreed to consent orders after inaccurately reporting information regarding the recalls.

Hyundai's civil penalty of $140 million consists of an upfront payment of $54 million, safety performance expenditures of $40 million, and $46 million in a deferred penalty if it fails to meet requirements.

As part of the settlement, Hyundai will invest $40 million for building a safety field test and inspection laboratory in the US and implementing new IT systems for analyzing safety data.

Meanwhile, Kia’s civil penalty of $70 million includes an upfront payment of $27 million, $16 million on specified safety measures, and $27 million in deferred penalty.

NHTSA Deputy Administrator James Owens said manufacturers must recognize the urgency of safety recall responsibilities and provide timely and candid information about all safety issues.

Brian Latouf, chief safety officer, Hyundai Motor North America assured they are taking immediate action to enhance response to potential safety concerns.

Kia denied the allegations but agreed to settle the matter to avoid a protracted dispute with the government and to restructure and transfer the departments responsible for recall determinations to the US.

Consequently, Kia will create a new US safety office headed by a chief safety officer.

Each automaker must retain an independent, third-party auditor who will report to NHTSA and conduct a comprehensive review of the safety practices.

Hyundai’s consent order will last three years, while Kia’s is for two years, but both can be extended by one year.