South Korean automakers Kia and Hyundai have been fined $137 million in penalties due to slow action in recalling 100-plus million of its autos. The penalties were over a possibility that engines could inexplicably fail. The fines were announced by The National Highway Traffic Safety Administration (NHTSA) and the recalls took place over three years and involved various Hyundai and Kia models through 2011.
The safety agency began its probe in 2017. By then, Hyundai had recalled nearly 470,000 of its vehicles in 2015 because manufacturing debris could restrict the flow of oil to rod bearings. That would make the bearings fail prematurely, potentially causing engine problems like stalling or catching fire. The solution to the issue was a costly replacement of the vehicle’s engine block.
NHTSA maintained that Hyundai limited its recall to engines made prior to April 2012, after which the company said it solved the manufacturing problem. Plus, Kia contended that its 2.4-liter and 2-liter Theta II engines were made on a different assembly line at its Alabama plant. The company didn’t recall those vehicles. But the auto manufacturer later recalled 1.2 million additional vehicles for the exact problem as the prior recall, including the models it said weren’t affected.
James Owens, Deputy Administrator for the NHTSA, said: “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.”
As part of its agreement, Hyundai will invest $40 million to improve the safety of its engine’s operations. The automaker will also pay $54 million in fines. Hyundai is also required to build an inspection laboratory and field test in the U.S., while also installing new computer systems to help identify safety problems. The company also faces an additional $46 million of fines, to be deferred if Hyundai can meet its safety requirements.
As for Kia, it must pay $27 million in fines and invest $16 million into safety performance. NHTSA is allowing an additional $27 million in penalties to be deferred if the company meets requirements. Kia will also have an office in the U.S. dedicated to overseeing safety measures.
Both automakers will be responsible for hiring an independent auditor to review their practices and safety standards. The companies also agreed to improvements at its organizational level to help identify safety issues.
Brian Latouf, a chief safety officer for Hyundai, said: “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.”
In June 2018, NHTSA investigated two more complaints against the automakers, which haven’t been resolved yet. The agency says it has complaints involving fires, injuries, and one death. NHTSA has granted a petition into the accusations, which were filed by the Center of Auto Safety, a non-profit consumer advocacy group. The center’s executive director, Jason Levine, said complaints had fallen on deaf ears, leading to the petition.
“Only time will tell if this sort of deferred penalty and mandated investments in safety operations will actually deter similar behavior in the future by these or other manufacturers,” Levine said.
The newer investigations cover fires occurring in nearly three million of the Korean automakers’ vehicles. All of the fires occurred in non-crash situations. NHTSA said it has received numerous complaints of fires in engine compartments, taillight housings, light bulbs, and wiring harnesses.
The Korean automakers have said some of the engine block replacements were done incorrectly by auto dealers. Kia acknowledged that a high-pressure fuel pipe could have been damaged, improperly tightened, or misaligned during repairs, allowing gasoline to leak and spatter on some of the vehicles’ engine parts, causing more fires.
The Center for Auto Safety said there have been 31 recalls from Kia and Hyundai since 2015. Most are engine and fire-related. Over 20 models from 2006 to 2021 are involved in the recalls, affecting more than 8.4 million vehicles.