Judge rejects Hyundai, Kia class-action settlement

A federal judge has denied Hyundai and Kia’s $200 million settlement agreement in a multidistrict class action against the automakers following a car theft frenzy that targeted certain model years, ruling that the amount is not enough for some owners.

The settlement had offered different awards based on the severity of financial loss, and it was reached by Hyundai and Kia as well as lawyers representing plaintiffs who claimed their vehicles are too easy to steal because they lack engine immobilizers, a crucial anti-theft device.

About 9 million Hyundai and Kia vehicles spanning the 2011-2022 model years use a physical key instead of a push-button start system and do not have the capability to prevent the engine from starting without a key fob present. Last summer, videos on social media demonstrated how to easily hot wire the vehicles, sparking a nationwide crime spree.

Following the rampant spike in car theft, lawsuits against the automakers began popping up around the U.S., urging Hyundai and Kia to issue a recall and retroactively install immobilizers on the long list of targeted models.

Last September, the lawsuits were consolidated into a multidistrict litigation case in the Central District of California. The case now represents 79 lawsuits spanning more than 24 district courts.

The $200 million settlement proposed to award owners whose cars were stolen and never recovered or completely totaled — the most severe category — up to $6,125. Owners whose cars were damaged or who lost personal property during an attempted theft would be eligible to receive up to $3,375.

According to court documents, U.S. District Judge James Selna ruled that those amounts were not satisfactory because vehicles built in 2011 would be worth less than those manufactured in 2022, which could be worth “substantially more.”

Hyundai spokesman Ira Gabriel said in a statement that both Hyundai and Kia are working to “clarify and revise” that aspect of the settlement, and they plan to “renew the motion for preliminary approval of [the] revised settlement agreement in the next 2 to 3 weeks.”

The proposed settlement also requires Hyundai and Kia to continue installing free software updates on the affected vehicles equipped with burglar alarms. The automakers estimate there are about 7 million vehicles on road eligible for that upgrade. The patch initially was made available to a small group of vehicles in February with a fuller rollout starting in April.

But six attorneys general around the country say the software updates do little to stop the theft problem. In a letter written to the court, they claim the software fix will take years to complete and note that 2 million vehicles can’t be updated.

To remedy that subset of vehicles, Hyundai and Kia have been handing out steering wheel locks. The attorneys general say the measure is “limited” and is not sufficient to deter the thieves.

Kia spokesperson James Bell said in a statement that the letter’s estimated time for full completion of the installations “is not supported by the fact that 15-20 percent of the impacted vehicles are no longer in service.”

Regarding the steering wheel locks, Bell said Kia has distributed “more than 192,000 locks nationwide” and “will continue to provide them as they are needed.”

The attorneys general also have called into question the efficacy of the software update itself. Last month in Minneapolis, for example, the number of Hyundai and Kia vehicles stolen was “15 times the monthly average in 2021 (313 vs. 20).”

Bell said Kia is working diligently to combat ongoing car thefts, and it “has been and continues to be willing to work cooperatively with public officials and law enforcement agencies across the country.”

“We remain committed to vehicle security,” he said.

Hyundai and Kia have been trying to draw more attention to the availability of the software update, including staging mobile service centers with technicians onsite to perform the updates. Hyundai held one service event in Washington, D.C. and Kia in Atlanta.

Hyundai now reports a 21 percent completion rate. Kia is at 20 percent. Both say they are studying ways to scale up the clinics.