On November 21, 2018, Reuters reported that U.S. prosecutors were examining whether Hyundai Motor and affiliate Kia Motors handled their engine-defect recalls properly. The matter centers on recalls that affected nearly 1.7 million vehicles in the United States in 2015 and 2017.
According to a person familiar with the matter and documents reviewed by Reuters, the U.S. Attorney’s Office for the Southern District of New York has opened a criminal investigation. The person said the probe is being coordinated with the National Highway Traffic Safety Administration, though it is still unclear whether it will result in charges.
Nicole Navas Oxman, a spokeswoman for the Justice Department, declined to discuss the matter. In an emailed statement, she said: “The Justice Department generally does not confirm, deny or otherwise comment on the existence or non-existence of an investigation.”
The recalls stem from engine failures that can raise crash risk. Hyundai recalled 470,000 Sonata sedans in 2015 over failures of its Theta II engines, then expanded the action in 2017 to 572,000 Sonata and Santa Fe sport utility vehicles. Kia also recalled 618,160 Optima, Sorento and Sportage vehicles in the United States because they used the same engine.
NHTSA said it still had active investigations into engine issues involving certain Hyundai and Kia vehicles and that no final conclusions had been reached. The regulator is also separately reviewing whether the companies recalled enough vehicles and whether those recalls were carried out in a timely way.
The criminal review adds to pressure on the South Korean automakers, which together rank among the world’s largest carmakers and have already set aside about 1 trillion won, or $885 million, in 2017 and 2018 to cover recall-related costs. The companies have also been dealing with weak sales in the United States and China.
Reuters noted that the United States has previously pursued major auto industry enforcement actions, including cases involving Toyota and Volkswagen. In 2017, a U.S. judge dismissed a criminal charge against Toyota after it completed three years of monitoring under a $1.2 billion settlement tied to misleading the public about sudden unintended acceleration. Volkswagen later paid $4.3 billion in fines in 2017 after admitting to diesel emissions fraud.
Hyundai declined to comment on the SDNY probe.
Reporting by Hyunjoo Jin in Seoul and David Shepardson in Washington, with additional reporting by Diane Bartz.
