The US Auto Safety Regulatory body found the sister Korean auto brands guilty of reporting inaccurate information regarding vehicle recalls
In a major development, the US units of Hyundai Motor Co. and Kia Motors have agreed to pay a hefty sum of $210 million as a penalty to US Auto safety regulators as the brands failed to recall 1.6 million vehicles for engine issues in a timely fashion.
The U.S. National Highway Traffic Safety Administration (NHTSA) said that the two sister Korean auto brands agreed to consent orders after the agency found them guilty of reporting inaccurate information regarding the recalls to NHTSA. The vehicles in question ran the risk of catching engine fire.
Distribution of Penalty
Hyundai agreed to pledge a total of $140 million (Rs 1,035 crore) as a civil penalty including an upfront payment of $54 million, an obligation to spend $40 million on safety performance measures. An additional $46 million penalty will be deferred if the company does not meet the above requirements.
Kia, on the other hand, has faced a penalty of which totals up to $70 million (Rs 518 crore) including an upfront payment of $27 million and a further $16 million to be invested on specified safety measures. It will be obligated to an additional penalty of $27 million in case the company fails to meet the above requirements.
The settlement covers recall in 2015 and 2017 for manufacturing issues that could lead to bearing wear and engine failure. As a part of this settlement, Hyundai had agreed to invest $40 million in order to build a safety field test and inspection laboratory in the United States. This facility would be implementing new IT systems for better analysis of safety data.
For reference, these settlements are separate from ongoing NHTSA investigations of non-crash fires in certain Hyundai and Kia cars. Some of these cars with faulty engines have been recalled. Similarly in August 2014, Hyundai had agreed to pay a $17.35 million fine to settle an NHTSA investigation regarding the delayed recall of 43,500 Genesis cars to fix a brake defect linked to two incidents. NHTSA at that time suggested Hyundai to “change the way it deals with safety-related defects”.
Vehicular safety is taken very seriously in Western markets such as Europe and America, unlike India where many consumers still do not prioritize this attribute while buying a car. Private organizations like Global NCAP have been testing cars sold in India and has given some surprising results. For example, the Kia Seltos sold in India scored a 3 star rating while the one sold in the international market has a 5 star rating. Not only Kia, even companies like Hyundai, Suzuki have reported lower safety ratings for their cars sold in India, as compared to their same cars sold outside India.