August 7, 2014 at 5:51 pm

Hyundai to pay $17.35M fine for recall delay

Hyundai Motor Co. agreed to pay a $17.35 million civil penalty for delaying a 2013 recall, the National Highway Traffic Safety Administration said Thursday.

As a result of failing to report in a timely manner a safety-related defect affecting 43,500 2009-2012 Hyundai Genesis cars, the Korean automaker also agreed to comply with NHTSA oversight requirements.

The defect involves corrosion in the brake system that can result in reduced braking effectiveness. While no fatalities have been reported, there are six reported collisions, and two people have been injured, NHTSA said.

NHTSA said its investigation found that Hyundai had been aware in 2012 that brake fluid used in the 2009-2012 Hyundai Genesis did not sufficiently inhibit corrosion. “Rather than issue a recall, Hyundai instructed dealers to change the brake fluid in affected vehicles without explaining the consequences of failing to change the brake fluid. Hyundai also did not inform Genesis owners of the potential safety consequences,” NHTSA said.

Hyundai issued a recall of the affected vehicles in October 2013 as a result of a NHTSA investigation. The majority of cars to date have had recall fixes, Hyundai said.

Federal law requires automakers to report safety-related defects to NHTSA within five days. NHTSA Acting Administrator David Friedman said, “Hyundai failed to act to protect their customers and others that were harmed in an accident, and must change the way they deal with all safety-related defects.”

David Zuchowski, president and CEO of Hyundai Motor America, said, “In order to mitigate a situation like this in the future, Hyundai is instituting new organizational and process improvements, and enhancing the ability of the U.S. leadership team to readily respond to regulatory reporting requirements.”

As of Jan. 14, Hyundai had received 87 consumer complaints about the Genesis.

This is the latest example of NHTSA taking a hard line with automakers for delaying recalls. It fined General Motors Co. a record $35 million in May for delaying an ignition switch recall of 2.6 million vehicles linked to 13 deaths and 54 crashes. Ford Motor Co. paid $17.35 million in 2013 for delaying a recall of 420,000 Ford Escape SUVs linked to one death and 9 injuries. NHTSA fined Toyota Motor Corp. nearly $50 million for delaying three separate recalls.

Foxx wants to hike the maximum fine for delaying a recall to $300 million up from the current $35 million, saying the current fines are too low to serve as a deterrent.

U.S. Transportation Secretary Anthony Foxx said, “Safety is our top priority, and all automakers should understand that there is no excuse for failing to report a safety-related defect, as required by law.”