A lawsuit has been filed against Hyundai Motor Corp. and Kia Motors Corp for over $775 million in damages due to the auto companies admitting they overstated the fuel economy in close to 1 million vehicles in the U.S. and Canada last Friday.
Reuters is reporting that the lawsuit was filed in the U.S. District Court for Central California on behalf of 23 Hyundai and Kia vehicle owners.
The lawsuit is expected to challenge Hyundai and Kia's compensation plan that they have set to satisfy disappointed customers.
The South Korean automakers admitted last Friday that they had overstated the fuel economy on 13 Kia and Hyundai models after the U.S. Environmental Protection Agency released a report about the mistakes. The agency looked into the matter after over a dozen customers filed complaints with the companies.
The companies have already announced that they will refund or compensate owners who feel they were tricked into buying their vehicle because of the fuel economy.
"I sincerely apologize to all affected Hyundai and Kia customers, and I regret these errors occurred," W.C. Yang, chief technology officer of Hyundai/Kia research and development, said last week in a press statement. "Following up on the EPA's audit results, we have taken immediate action to make the necessary rating changes and process corrections."
Experts believe that the compensation plan is going to wind up costing Hyundai and Kia over $100 million a year until all of the cars are gone according to Moody's Investors Service.
There have been no estimates made on how much the company's will lose due to legal fees however.
Last week was not a good week for Hyundai, as the company's stock went down one percent and has lost a total of 7 percent this week since the announcement of the lawsuit was made. Likewise, the stock percentage for Kia also dropped a total of five percent since last Friday according to Reuters.
As we reported last week, the problem was allowed to happen mainly because of an issue with the tests the companies put their cars through to determine fuel economy. The tests are a long drawn out process which includes measuring the resistance of a number of different systems.Such systems include how the specific car cuts through the air, how tires meet the rad, and how the vehicles moving parts work together according to The Detroit Press.
Then you have to take into account how many miles are on the car, the condition of the tires, among other aspects. The last step includes determining "which kind of regulation and guidance procedures" they should follow.
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