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Hyundai, Kia face US$775m lawsuit over false fuel economy claims

November 08, 2012

Hyundai and affiliate Kia facing class action. — Reuters file picHyundai and affiliate Kia facing class action. — Reuters file picSEOUL, Nov 8 — A lawsuit has been filed in the US against Hyundai Motor Co and affiliate Kia Motors Corp, seeking US$775 million (RM2.4 billion) in damages in one of the biggest known actions against the automakers since they admitted overstating the fuel economy of some their vehicles.

The South Korea carmakers conceded on Friday that they had overstated the fuel efficiency ratings on more than one million recently sold vehicles in the United States and Canada, and agreed to compensate owners for the additional fuel costs.

Spots of bother. — Reuters file picSpots of bother. — Reuters file picThe lawsuit, which seeks class-action status, was filed in the US District Court for Central California on behalf of 23 Hyundai and Kia car owners, and challenges the automakers’ compensation plan.

Under the plan, customers will receive a debit card that will reimburse them for the difference in fuel economy, and an extra 15 per cent to the amount will be added to acknowledge the inconvenience.

The lawsuit, which like a separate one filed in the Southern District of Ohio this week, is seeking further compensation for the reduced value of their vehicles.

Hyundai Motor was also sued in July by public interest group Consumer Watchdog for allegedly misleading consumers sensitive to high petrol prices that its popular 2011 and 2012 Elantra model is more fuel efficient than it actually is.

A Hyundai Motor spokesman declined to comment on the lawsuits.

Moody’s Investors Service has estimated that the automakers’ compensation plan for fuel costs will cost them US$100 million a year until the cars are scrapped but has not estimated potential legal costs.

Hyundai shares were down 1 per cent this morning, and have lost 7 per cent since rumours of lawsuits first emerged late last week. Kia’s stock fell 2.4 per cent and has lost 5 per cent since late last week.

The broader market was down 1.5 per cent today. — Reuters

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