Hyundai, Kia Engine Fire Problems Result in $210M Fine Over Delayed Recalls

Hyundai and Kia have reached a $210 million agreement with federal highway safety officials to resolve a two year investigation into the delay in issuing recalls that impacted more than a million vehicles, which were prone to experience engine fires.

The U.S. National Highway Traffic Safety Administration (NHTSA) announced the consent order with Hyundai Motor America, Inc. and Kia Motors America, Inc. on November 27, concluding an investigation of the automakers’ untimely recall of more than 1.6 million vehicles equipped with Theta II engines, which may contain leaking anti-lock brake hydraulic control units.

The investigation was first opened after the Center for Auto Safety, a consumer vehicle safety watchdog, presented more than 3,000 customer reports of Hyundai and Kia engine fires, along with a petition for the NHTSA to look into what was believed to be faulty oil pans, catalytic converters, fuel leaks, oil leaks, and other problems that increased the risk of a vehicle fire.

After determining a preliminary investigation was warranted, the NHTSA Office of Defects Investigation (ODI) concluded the automakers inaccurately reported customer warranty claims, which delayed disclosing a potentially life threatening defect.

The consent orders amount to $210 million in fines against the automakers, with Hyundai being subject to a total civil penalty of $140 million, including an upfront payment of $54 million and an obligation to expend an additional $40 million on specified safety performance measures. An additional $46 million deferred penalty may become payable if specified conditions are not satisfied.

Under Kia’s consent order, the company will be forced to pay a total civil penalty of $70 million, which includes an upfront payment of $27 million, an obligation to expend an additional $16 million on specified safety performance measures, and an additional $27 million deferred penalty that may become payable if specified conditions are not satisfied.

In addition to monetary penalties, Kia announced it will create a new U.S. safety office, and Hyundai will be building a U.S. test facility specifically for safety investigations. Both companies will be required to develop sophisticated data analytics programs to better detect safety-related concerns and must retain an independent third-party auditor to evaluate the protocols.

The third-party auditor will be required to report directly to the NHTSA after conducting periodic reviews of the newly implemented safety practices for three years.

Since the NHTSA’s investigation was first opened, the agency learned of thousands of non-collision car fires, including several injuries and at least one fatality related to certain Kia and Hyundai vehicles equipped with Theta II engines.

Hyundai and Kia ultimately discovered the engine compartment fires were caused by brake fluid leaking inside of the hydraulic control unit for the anti-lock brakes, possibly causing an electrical short that can lead to fires.

To date, Kia and Hyundai, which are separate brands but share the same parent company, have issued a recall for approximately 600,000 vehicle impacted by the defect. The vehicles recalled include 151,205 model year 2013 through 2015 Hyundai Santa Fe Sport vehicles and 440,370 model year 2013 Kia Optima and 2014 through 15 Kia Sorento models.

Owners are being asked to contact either Kia customer service at 1-800-333-4542 and reference the recall number SC197, and Hyundai customers may contact 1-855-371-9460 and reference the recall number 194.