Hyundai and Kia Face Lawsuits, Losses Over Exaggerated Fuel-Economy Claims


  • 2012 Hyundai Accent Front Three Quarters

    2012 Hyundai Accent Front Three Quarters

    The 2012 Hyundai Accent is one of the cars with overstated fuel-economy claims. | November 07, 2012

Just the Facts:
  • Hyundai and Kia are facing legal challenges by unhappy consumers over their exaggerated fuel-economy claims, while Moody's Investors Service said the two companies stand to lose about $100 million in a consumer-compensation plan.
  • Hagens Berman on Tuesday filed a second proposed class-action lawsuit against Hyundai and Kia, saying that the economic harm suffered by consumers "could easily approach $775 million."
  • Hyundai and Kia have not disclosed how much the overall reimbursement program will cost.

SANTA ANA, California — Hyundai and Kia are facing legal challenges by unhappy consumers over their exaggerated fuel-economy claims, while Moody's Investors Service said the two companies stand to lose about $100 million in a consumer-compensation plan.

Hagens Berman on Tuesday filed a second proposed class-action lawsuit against Hyundai and Kia, saying that the economic harm suffered by consumers "could easily approach $775 million."

This latest lawsuit, filed in federal court in Santa Ana, California, challenges the automakers' proposed reimbursement plan for owners and lessees. The lawsuit was brought on behalf of 23 Hyundai and Kia owners who allege they suffered economic losses.

"We think Hyundai's program falls well short of making this right for consumers," said Rob Carey, attorney for the plaintiffs, in a statement. "Making owners bring their cars in for an odometer check and forcing them to reapply every year for monies due today are enacted purely to shirk financial responsibility."

Hyundai Motor America defended its compensation program in the wake of the legal challenges.

"We think our reimbursement program provides the best, quickest, and most customer-focused remedy," wrote Jim Trainor, a Hyundai Motor America spokesman, in response to a query from Edmunds on Wednesday. "We are fully compensating affected Hyundai owners for the additional lifetime fuel costs associated with our rating adjustment — plus a 15 percent premium. Owners have responded very favorably to the plan. Our priority is to make this right for our owners, and that's precisely what this program does."

Kia Motors America told Edmunds it has not yet had the opportunity to review the latest lawsuit.

"Consequently, it would be inappropriate to offer comment at this time," wrote Scott McKee, a Kia spokesman, in an e-mailed message. "But our priority is and will remain making things right for our customers, which is why we've created our comprehensive customer reimbursement program."

The Hagens Berman suit contends that current owners will face a drop in the value of their Hyundais and Kias when they try to sell or trade them in. The EPA found errors in the mileage estimates of 13 2011-'13 Hyundai and Kia models.

Another class action lawsuit regarding the misstated fuel-economy claims was filed in the Southern District of Ohio on behalf of three people and seeks a jury trial to include others who bought Hyundai or Kia cars.

Hyundai and Kia have not disclosed how much the overall reimbursement program will cost. But Hyundai CEO John Krafcik on Friday told reporters that the cost would be "certainly millions" of dollars.

Moody's Investors Service told Reuters on Tuesday that North America accounted for about 24 percent of Hyundai's global sales in the first nine months of 2012. Moody's said until these cars are scrapped, the cost of buying customers' fuel will be about $100 million — and that additional expenses may be incurred by Hyundai and Kia.

Edmunds says: It will be a long time before the true cost to Hyundai and Kia in the overstated fuel-economy issue is calculated.

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