Hyundai Agrees to $17.35 Million Fine from NHTSA

Feds slap maker for failing to report brake problem in five days.

by on Aug.08, 2014

Hyundai was fined $17.35 million for failing to report a brake problem on 2009-2012 Genesis sedans.

The National Highway Traffic Safety Administration levied a $17.35 million fine against Hyundai for taking too long to report a brake defect on 43,500 vehicles. The fine is the first evidence that federal regulators are stepping up enforcement, officials 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,” said U.S. Transportation Secretary Anthony Foxx in a statement. “This Administration will act aggressively and hold automakers accountable when they put the American public at risk.”

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Earlier this year, the agency fined General Motors a record $35 million for its handling of the ignition switch problem that resulted in the recall of more than 2.6 million vehicles, 13 deaths and dozens of injuries. GM recently began accepting claims from victims and their families injured or killed as a result of the problem, and it set aside $400 million to pay the claims.

In Hyundai’s case, the problem occurred in 2009-2012 Genesis sedans, which were recalled in October 2013 after a NHTSA investigation, because corrosion in the brake system could make it more difficult to stop, increasing the risk of a crash. The agency received 87 complaints from owners about the problem.

However, the agency determined that Hyundai knew in 2012 that brake fluids used in those cars “did not sufficiently inhibit corrosion in key components” of the brake system. There have been six crashes, including two injuries, as a result of the problem, NHTSA said. No fatalities have been reported.

(Hyundai issues third recall in one week. For more, Click Here.)

Automakers have five days to report any safety defect once it is discovered. However, Hyundai did not notify the agency instead issuing a service bulletin to dealers telling them change the brake fluid in the vehicles. The company didn’t inform the dealers or the car owners why it was being done, including the potential safety risks involved in not getting the procedure completed.

(Click Here to find out if it’s better to lease or buy…or neither.)

“Hyundai remains committed to making safety our top priority, and is dedicated to ensuring immediate action in response to potential safety concerns, including the prompt reporting of safety defects,” said Hyundai U.S. CEO David Zuchowski in a statement.

(To see more about GM’s latest recall, Click Here.)

The automaker also agreed to change its process for identifying and reporting issues to NHTSA. It will form a technical panel to review problems and make recommendations about reporting and recalls. It also agreed to meet with the agency more often to discuss issues or potential problems.

“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,” Zuchowski said.

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