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Hyundai and Kia settling litigation over fuel economy reductions; valued at up to $395M

24 December 2013

Hyundai Motor America and Kia Motors America have entered into settlement agreements with current and former owners and lessees of vehicles affected by the Hyundai/Kia November 2012 lowering of fuel economy ratings. (Earlier post.) The reductions in fuel economy affected approximately 27% of Hyundai 2011-13 model year vehicles, reducing their combined city/highway fuel economy by 1-2 mpg; the adjustment affected approximately 300,000 2011-13 model year Kia vehicles.

Following disclosure of the fuel economy ratings discrepancy in November 2012, approximately 53 federal complaints were filed against Hyundai and Kia and later consolidated (In re: Hyundai and Kia Fuel Economy Litigation, MDL No. 2424) in United States District Court for the Central District of California before Judge George H. Wu.

The Hyundai settlement agreement is valued at up to approximately $210 million; the Kia agreement at up to approximately $185 million. The number is dependent on how many customers elect to participate in the settlement’s one-time lump sum payment option or remain in the lifetime reimbursement program introduced at the time of the restatement.

At the time of the restatement in 2012, Hyundai and Kia offered a lifetime reimbursement program to cover the additional fuel costs associated with the rating change, plus a 15% premium in acknowledgment of the inconvenience to customers. Affected owners and lessees are compensated based on their actual mileage and the fuel costs for the region in which they live.

To address plaintiffs’ claims including the requirement to return to a dealership for mileage verification, which plaintiffs felt could deter participation in the reimbursement program, Hyundai and Kia agreed to add a lump sum payment option.

The Court is expected to review the proposed settlement for preliminary approval in early 2014. Assuming preliminary approval is granted, notices will be sent to individual class members. A more in-depth website dedicated to the settlement will be established following preliminary approval by the Court.

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Will Ford have to pay for larger misleading fuel economy claims on some of their Hybrid models.

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