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Feds open investigation into recall of 1.7M Hyundais, Kias

US safety regulators have opened a formal investigation into the recall of nearly 1.7 million vehicles by Hyundai and affiliate Kia over engine defects, according to filings published Saturday. A South Korean whistleblower reported concerns last year to the National Highway Traffic Safety Administration (NHTSA), which will probe the timeliness of three recalls carried out in the United States and whether they covered enough vehicles. Fines could be imposed on the automakers if the NHTSA determines the recalls were not conducted properly. The agency did not immediately comment on the probe. A Hyundai spokesman in Seoul the company "has conducted recalls in compliance with US regulations and procedure" and will "sincerely" cooperate with the investigation. In 2015, Hyundai recalled 470,000 U.S. Sonata sedans, saying engine failure would result in a vehicle stall, increasing the risk of a crash. At that time, affiliate Kia did not recall its vehicles, which share the same "Theta II" engines. Kim Gwang-ho, then an engineer at Hyundai, flew to Washington in August 2016 to tell NHTSA the companies should have recalled more vehicles over the problem, citing an internal report. He also reported several alleged safety lapses to both U.S. and South Korean authorities. On March 31, Hyundai expanded its original U.S. recall to 572,000 Sonata and Santa Fe Sport vehicles with "Theta II" engines, citing the same issue involving manufacturing debris, the NHTSA said. On the same day, Kia also recalled 618,160 Optima, Sorento and Sportage vehicles which use the same engine. The recall, which was also conducted in Canada and South Korea, cost the duo 360 billion won ($322.40 million). "TIMELINESS AND SCOPE" According to the filings published Saturday, the agency opened a probe May 18 into "both the timeliness and scope" of the "Theta II" engine recalls and their "compliance with reporting requirements." In August 2014, Hyundai agreed to pay a $17.35 million fine to settle a NHTSA investigation it delayed the recall of 43,500 Genesis cars to fix a brake defect linked to two injuries. NHTSA said in 2014 Hyundai "must change the way they deal with safety-related defects." Hyundai vowed to make improvements to how it handled safety issues after the fine. In 2015, the company retained former U.S. Transportation Secretary Ray LaHood as an adviser on safety issues.

IIHS Top Safety Pick and Top Safety Pick+ awards get tougher: Here are the latest winners

Automakers love to trumpet the accolades from the Insurance Institute for Highway Safety, but the agency keeps making its best grades harder to achieve. For 2020, it is raising the bar again, requiring a better score in the passenger-side small-overlap crash test, wider availability of top-performing headlights, and automatic emergency braking systems that effectively avoid collisions with pedestrians, in addition to its previous benchmarks. Why the 2020 criteria is harder: To be named either a Top Safety Pick or Top Safety Pick+, the required performance in the passenger-side small-overlap crash test has been raised from Acceptable to Good, meaning that the model must achieve Good ratings in all crash tests. The Nissan Rogue, for example, scored an Acceptable in the passenger-side small overlap crash, and so it loses its Top Safety Pick rating for 2020. To achieve either of the top ratings, a vehicle's automatic emergency braking system must effectively avoid hitting pedestrians as well as other vehicles. (The automatic emergency braking system can be optional, but then the award applies to the model only when so equipped.) Any vehicle whose automatic emergency braking system does not include pedestrian detection would lose its TSP or TSP+ rating for 2020, the Ram 1500 being one example. To be named a Top Safety Pick+, the model can have no variant with headlights that achieve less than an Acceptable rating (most new cars have different headlights — often LEDs — that are exclusive to upper trim levels).

Trump encouraged by talk of 'a level playing field' on trade with South Korea

South Korea is a longstanding American ally, but President Donald Trump has spoken harshly about U.S. trade imbalances and threatened to tear up the bilateral trade pact. "We will do more to remove barriers to reciprocal trade and market access," Trump said, adding that the two leaders had talked about the thorny trade areas of steel and autos. Trump said he was encouraged by South Korea's President Moon Jae-in's assurances that he would seek a level playing field for American workers and businesses, particularly automakers. A joint statement said the two sides had agreed to work together to reduce over supply of basic materials such as steel and non-tariff barriers. It also said Trump had accepted an invitation from Moon to visit South Korea this year. Bonnie Glaser, senior adviser for Asia at the Center for Strategic and International Studies think tank, said it was unwise for Trump to air the trade issue so publicly. "Public complaints by Trump about unfair trade and inadequate defense spending provide opportunities for China and North Korea to drive a wedge between the allies," she said. The U.S. goods trade deficit with South Korea has more than doubled since the U.S.-Korea free trade pact known as KORUS took effect in 2012. The agreement was forecast to boost U.S. exports by $10 billion a year, but in 2016 they were $3 billion lower than in 2011. At the start of Friday's talks, U.S. Commerce Secretary Wilbur Ross said the largest component of the deficit was automotive trade and many non-tariff barriers to U.S. auto exports to South Korea remained. "I think the way to address it is to deal product by product with what we can do to change the export side and what we can do to reduce the bad imports side," he said. Ross said later on Friday that some progress had been made in the talks. The current pact was agreed to despite protests by supporters of Moon, who was then in opposition. But analysts have suggested that given the need to preserve a unified front in the face of a hostile North Korea, there could be compromise on both sides to resolve issues. (By David Brunnstrom and Lisa Lambert. Additional reporting by Fatima Bhojani, Roberta Rampton, Tim Ahmann, David Chance, David Lawder and Eric Beech; Editing by Bill Trott and Andrew Hay) Related Video: Image Credit: Kim Hong-Ji / Reuters Government/Legal Genesis Hyundai Kia trade