[Asia Economy Reporter Suyeon Woo] Hyundai Kia Motors has reached an agreement with the U.S. National Highway Traffic Safety Administration (NHTSA) to conclude the adequacy investigation of the Theta2 GDi engine recall and has finalized fines and additional quality-related investments.
On the 27th (local time), the U.S. National Highway Traffic Safety Administration (NHTSA) concluded the adequacy investigation of Hyundai Kia Motors' Theta2 GDi engine recall and imposed a fine of $81 million (approximately 89.5 billion KRW).
Hyundai Kia Motors and NHTSA agreed to pay the fine and, separately, decided to make an internal investment of $56 million (61.8 billion KRW) to strengthen quality. A clause was also added stating that if this is not implemented, an additional fine of $73 million (80.6 billion KRW) will be imposed.
Earlier, last year Hyundai Kia Motors reached a settlement with the class-action customers regarding the Theta2 GDi engine and received preliminary approval from a U.S. court in June, proceeding with compensation. In June, the U.S. federal prosecutor’s investigation was closed without charges, and with the final conclusion of NHTSA’s recall adequacy investigation, all legal and administrative procedures related to the Theta2 GDi engine in the U.S. have been completed.
Since 2017, NHTSA has been conducting an adequacy investigation of the recall for vehicles equipped with the Theta2 GDi engine, which Hyundai and Kia conducted in 2015 and 2017, respectively. NHTSA raised issues that the timing of Hyundai Kia Motors’ recall was inappropriate and that the quality reports were not precisely prepared. However, Hyundai and Kia countered that the recall and related tasks were carried out in accordance with safety-related procedures and regulations.
A Hyundai Kia Motors official explained, "This decision was made to conclude the investigation early and definitively end the controversy over the Theta2 GDi engine in order to focus on enhancing customer safety and expanding sales in the U.S."
Additionally, Hyundai Kia Motors agreed with NHTSA to strengthen quality-related investments in the U.S. Hyundai will invest $40 million (44.2 billion KRW) in developing quality-related data analysis systems, expanding vehicle research facilities, and enhancing training for safety and quality personnel. Kia decided to invest $16 million (17.7 billion KRW) internally in developing quality-related data analysis systems and other areas.
Hyundai Kia Motors demonstrated its commitment to transparently and proactively address quality-related controversies by reflecting large-scale quality costs in its third-quarter performance. Hyundai conducted a recall of 470,000 U.S. Sonata models from 2011 to 2012 equipped with the Theta2 GDi engine, citing potential engine defects due to cleanliness management issues in the production process at its U.S. plant in 2015. In 2017, due to sporadic foreign substance occurrences during engine manufacturing at the U.S. plant, Hyundai and Kia recalled approximately 572,000 Sonata and Santa Fe models from 2013 to 2014, and about 620,000 Optima (2011?2014), Sorento (2012?2014), and Sportage (2011?2013) models.
A Hyundai Kia Motors official stated, "We are doing our best to protect customers by applying the KSDS, an engine abnormal vibration detection system, to Theta2 GDi engine models to prevent problems in advance and by extending warranty periods. We will devote ourselves to strengthening quality systems and developing safer vehicles."
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