NHTSA Fines Hyundai $17M for Genesis Recall Delays

Hyundai Motor America has agreed to pay a $17.35 million civil penalty to the National Highway Traffic Safety Administration to settle charges that last year’s recall of 2009-2012 model-year Hyundai Genesis sedans wasn’t timely enough.

In October 2013, Hyundai issued a recall of approximately 43,500 Genesis vehicles to address potential brake system component corrosion arising from the use of incompatible brake fluid. The corrosion can lead to a reduction in braking performance. 

But earlier, in March 2013, Hyundai initially responded to the problem by issuing a technical service bulletin to its dealers, advising them to replace the brake fluid in the vehicles. The automaker issued the recall months later, after NHTSA opened an investigation of the issue.

Federal law requires automakers to report safety-related defects to NHTSA within five days.

No fatalities are linked to the problem, but six consumers reported collisions. Of the six crashes, two involved injuries, NHTSA said. As of Jan. 14, Hyundai had received 87 consumer complaints tied to the issue, most of which allege difficulty in braking.

NHTSA closed its investigation of the matter in April.

“NHTSA found that Hyundai had been aware in 2012 that brake fluids used in the model year 2009-2012 Hyundai Genesis did not sufficiently inhibit corrosion in key components of the vehicle’s brake system,” the federal agency said in a released statement. “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. Hyundai finally issued a recall of the affected vehicles in October 2013 as a result of a NHTSA investigation.”

In June, NHTSA and Hyundai representatives reached an agreement during meetings in Washington D.C.

As part of the settlement, Hyundai agreed to change its safety recall procedures as outlined in the terms of a consent order. The consent order requirements include revising how the company identifies, reports and communicates safety-related defects. The automaker must create a U.S. technical committee to review and make decisions regarding potential recalls of its vehicles in the U.S.

“Hyundai will ultimately be responsible for responding to safety concerns in a timely manner based on the Technical Committee’s recommendations,” NHTSA said in the released statement. This means U.S.-based executives have the authority to make safety recall decisions independently and without approval from Hyundai Motor Co.’s Korea-based management.

“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,” said David Zuchowski, president and CEO of Hyundai Motor America.

Hyundai Motor America is headquartered in Fountain Valley, Calif.

View the consent order