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By David Shepardson
WASHINGTON (Reuters) – U.S. units at Hyundai Motor Co and Kia Motors agreed a record $ 210 million fine on Friday after U.S. security officials said they missed 1.6 million vehicles on time Engine problems recalled.
The U.S. National Highway Traffic Safety Administration (NHTSA) said the two affiliated Korean automakers agreed to approve orders after misreporting some information about the recalls to the agency.
Hyundai agreed to a total civil penalty of $ 140 million, including an upfront payment of $ 54 million, a commitment to spend $ 40 million on security measures, and an additional $ 46 million deferred fine if not meets the requirements.
Kia's civil penalty is $ 70 million, including an upfront payment of $ 27 million, a requirement to spend $ 16 million on certain security measures, and a possible $ 27 million deferred fine.
"It is important that manufacturers adequately understand the urgency of their safety recall responsibilities and provide timely and open information to the agency on all safety issues," said James Owens, NHTSA deputy administrator.
The comparison includes recalls in 2015 and 2017 for manufacturing issues that could lead to bearing wear and engine damage.
As part of the settlement, Hyundai is investing US $ 40 million in the construction of a security field test and inspection laboratory in the USA and in the implementation of new IT systems for better analysis of security data.
"We are taking immediate action to improve our response to potential safety concerns," said Brian Latouf, Hyundai Motor North America's chief safety officer.
Kia said in a statement that it "denied the allegations but agreed to resolve the matter to avoid a protracted argument with the government." It added that it had agreed to "reorganize and relocate the recall policy departments to the United States."
In August 2014, Hyundai agreed to pay a $ 17.35 million fine to complete an NHTSA investigation that delayed the recall of 43,500 Genesis vehicles to resolve a braking failure that resulted in two injuries . In 2014, NHTSA said Hyundai had to "change how it deals with safety-related defects".
Kia agreed to set up a new US security office under the direction of a chief safety officer. Each automaker will hire an independent third-party auditor to report directly to NHTSA and conduct a comprehensive review of the company's safety practices.
Hyundai's declaration of consent has a term of three years, and that of Kia has a term of two years. However, both can be extended for one year.
The 2015 and 2017 recalls concerned the Hyundai Sonata 2011-2014 and Santa Fe Sport 2013-2014 vehicles, while Kia did not recall the vehicles until 2017 when it recalled the Optima 2011-2014, Sorento 2012-2014 and 2011-2013 sports vehicles.
The settlements are segregated from ongoing NHTSA investigations into non-crash fires in certain Hyundai and Kia vehicles, some of which have the recalled engines.
In 2019, Reuters reported that a group of US states were investigating Hyundai and Kia for possible unfair and misleading acts related to reports of hundreds of vehicle fires.
In November 2018, Reuters reported that federal prosecutors had opened a criminal investigation into Hyundai and Kia to determine whether vehicle recalls related to engine failures had been properly conducted.
In 2014, Hyundai and Kia agreed to pay the U.S. government $ 350 million in fines for overestimating fuel economy values, which at the time were the largest ever billed under the Clean Air Act.