South Korean carmaker Hyundai is joining General Motors (GM) as a member of a group it would surely prefer not to be a part of. It has agreed to pay a hefty fine of $17.35 million as a "civil penalty" for "failing to report in a timely manner a safety-related defect" in its Genesis sedans from the 2009-2012 model years.
While that's only about half the $35 million fine that GM got slapped with in May, it's a substantial amount for the much smaller company, which has been making steady gains in its U.S. auto sales in recent years.
As part of the settlement with The U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA), Hyundai also is agreeing to comply with NHTSA oversight. The defect involved corrosion of brake components that made the braking system less effective and raised the chances for accidents.
"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," said U.S. Transportation Secretary Anthony Foxx in a press release. "This Administration will act aggressively and hold automakers accountable when they put the American public at risk."
NHTSA says Hyundai had knowledge of the defect in 2012, but instead of issuing a recall, it told dealers to change the brake fluid with a compound that would have more corrosion resistance. But it didn't make the cars' owners aware of the defect or the dangers it posed. It wasn't until October of 2013 that Hyundai issued a recall for the brake problem after NHTSA investigated consumer complaints about the issue.
"Federal law requires automakers to report safety-related defects to NHTSA within five days, and neither NHTSA nor the American public will accept anything less," said NHTSA Acting Administrator David Friedman. "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."
About 70 percent of the affected Genesis cars have been repaired so far, the safety administration said.
Hyundai is committed to ensuring immediate action in response to potential safety concerns, including the prompt reporting of safety defects, said Jim Trainor, a senior group manager for Hyundai Motor America.
"In order to mitigate a situation like this in the future, Hyundai is instituting new organizational and process improvements, and enhancing the ability of its U.S. leadership team to readily respond to regulatory reporting requirements," he said in an email.
Hyundai may indeed be getting the message. Just last week it announced a recall of more than 419,000 cars and SUVs to fix suspension, brake and oil leak problems.
The biggest of three recalls posted Aug. 1 involves 225,000 Santa Fe SUVs from 2001-2006 to replace front coil springs that can rust and crack in cold-weather states. The springs can fracture and make contact with a tire, potentially causing a crash.