LDN - Business

U.S. regulators open probe into recall of nearly 1.7 million Hyundai, Kia models

[May 20, 2017] By David Shepardson and Hyunjoo Jin

SEOUL/WASHINGTON (Reuters) - U.S. safety regulators have opened a formal investigation into the recall of nearly 1.7 million Hyundai Motor Co <005380.KS> and affiliate Kia Motor Corp <000270.KS> U.S. vehicles for engine problems, according to filings.

After a Korean whistleblower reported concerns to it last year, the U.S. National Highway Traffic Safety Administration (NHTSA) said it would investigate the timeliness of the engine recalls and whether the recall campaigns covered enough vehicles.

The agency could impose fines if it determines the recalls were not conducted properly.

On Saturday, a Hyundai spokesman in Seoul said the company "has conducted recalls in compliance with U.S. regulations and procedure" and will "sincerely" cooperate with the probe.

Kim Gwang-ho, then an engineer at Hyundai, flew to Washington in August 2016 to tell NHTSA the company was not taking enough action to address an engine fault that increased the risk of crashes, citing an internal report from Hyundai's quality strategy team to management.

In an interview with Reuters in April, Kim said he gave the NHTSA 250 pages of internal documents on the alleged defect and nine other faults.

In 2015, Hyundai recalled 470,000 U.S. Sonata sedans to replace faulty engine parts and address stalling concerns.

Kim said he told the NHTSA that internal documents show Hyundai Motor should have recalled more vehicles over the problem.

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The Hyundai logo is seen outside a Hyundai car dealer in Golden, Colorado, November 3, 2014. REUTERS/Rick Wilking

Last month, Hyundai and Kia opted to recall another 1.48 million vehicles in the United States, Canada and South Korea to address the same issue at a cost of 360 billion won ($322 million), after reports to U.S. authorities of engine stalling, including some at higher speeds.

The U.S. models affected by the latest recalls were 572,000 Hyundai Motor’s Sonata and Santa Fe Sport vehicles with "Theta II" engines and Kia's Optima, Sorento and Sportage vehicles.

South Korean authorities said Kim's report to them sparked the recall in the U.S. The NHTSA did not say whether his complaint led to the recall.

In April, the NHTSA told Reuters that it was reviewing Kim's materials and "will take appropriate action as warranted". It did not elaborate on possible actions.

On May 18, the U.S. agency opened a probe into "both the timeliness and scope" of the "Theta II" engine recalls of Hyundai and Kia and their "compliance with reporting requirements," according to its filings seen on Saturday.

(Reporting by David Shepardson in WASHINGTON and Hyunjoo Jin in SEOUL, Editing by Eric Walsh, Soyoung Kim and Richard Borsuk)

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