August 7, 2014 / 9:40 PM / 3 years ago

UPDATE 1-Hyundai to pay $17.35 mln U.S. fine for delayed defect reporting

(Adds Hyundai, NHTSA comment, background)

DETROIT, Aug 7 (Reuters) - Hyundai Motor Co will pay a fine of $17.35 million for failing to report a brake defect in timely fashion to U.S. safety regulators, the National Highway Traffic Safety Administration said on Thursday.

NHTSA said the South Korean automaker delayed a recall for a defect that can cause corrosion in the braking system of about 43,500 Hyundai Genesis sedans from model years 2009 to 2012.

“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,” NHTSA said in a statement. “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.”

There have been no deaths reported that are related to this issue, but there have been two reports of injuries and six crashes, NHTSA said.

Automakers are required by federal law to report safety-related defects to NHTSA within five days, NHTSA said.

David Zuchowski, head of Hyundai Motor America, said in a company statement, “Hyundai remains committed to making safety our top priority, and is dedicated to ensuring immediate action in response to potential safety concerns including the prompt reporting of safety defects.”

Hyundai said that most of the affected cars have been fixed.

Hyundai has agreed with NHTSA to improve the way it identifies and reports safety defects.

The fine comes at a time when some U.S. politicians are calling for stiffer penalties for automakers and in some cases criminal prosecution for auto executives who are found to allow unsafe vehicles on the road.

This year, General Motors Co alone has recalled about 25.5 million vehicles. GM was fined the maximum penalty of $35 million for delaying the recall of cars with ignition switch defects that have led to the deaths of at least 13 people.

“This Administration will act aggressively and hold automakers accountable when they put the American public at risk,” said U.S. Transportation Secretary Anthony Foxx in the NHTSA statement.

Reporting by Bernie Woodall; Editing by David Gregorio and Andrew Hay

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