Hyundai faces consumer lawsuit in Korea over overstated Santa Fe fuel efficiency

Article by Christian Andrei, on July 8, 2014

Hyundai Motor Co. is facing a consumer lawsuit in South Korea following a disclosure of the country’s transport ministry that the carmaker overstated the fuel efficiency of its diesel-powered Santa Fe SUVs built between May 2012 and June 2014.

Around 1,500 owners of the SUVs have filed a complaint with the Seoul Central District Court, over the mpg overstatement, according to Kim Woong, managing partner at Yeyul law firm representing the consumers. A court official confirmed the filing to Bloomberg News.

The lawsuit could tarnish Hyundai’s reputation at its home turf where it is facing stiffer competition from imported brands like BMW and Volkswagen. Operations in South Korea generated 44 percent of Hyundai’s revenue in 2013, according to data compiled by Bloomberg.

Lee Sang Hyun, an analyst at NH Investment & Securities Co., told Bloomberg that the lawsuit is “definitely bad news” for Hyundai since while the compensation cost may be relatively small, there could be possibility that the South Korean government may decide to determine if more vehicles failed to meet its standards.

Hyundai and its affiliate Kia Motors Corp. have apologized in the United States for overstating the fuel economy of their vehicles in November 2012. That led the carmakers to issue debit cards to owners of around 900,000 cars and light trucks as a reimbursement for higher-than-expected fuel costs.

The carmakers agreed to spend up to $395 million to settle US lawsuits – paying as much as $210 million to owners of 2011-2013 model-year vehicles affected by the ratings.

Kim remarked to Bloomberg that the point of the lawsuit is to warn Hyundai that South Korean consumers can file a lawsuit the carmaker if its products are unsatisfactory.

He said that it is essential that “as many affected consumers as possible” participate in this lawsuit to show that South Korean companies would get a “red card” if they mess with customers. The lawsuit aims to involve up to 10,000 affected motorists, while seeking damages of KRW1.5 million ($1,500) for each, Kim disclosed.

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