New York City is taking legal action against South Korean automakers Hyundai Motor (HYMTF) and Kia, citing their failure to install anti-theft devices called immobilizers on most of their cars from 2011 to 2022, making them easy to steal. The automaker’s negligence allegedly increased vehicle theft, crime sprees, and reckless driving, causing public harm.
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In the official filing in the U.S. District Court in the Southern District of New York, the city accused the vehicle manufacturers of prioritizing profits over industry norms of including immobilizers as a standard safety feature.
Rising Thefts
New York joins the bandwagon of cities facing major theft sprees, including Baltimore, Cleveland, Milwaukee, San Diego, and Seattle. In the first four months of 2023, reported stolen Hyundai and Kia cars stood at 977, up significantly from 148 in the same period of 2022. A viral TikTok challenge in 2021 showing how to steal cars that lack immobilizers and push-button ignitions reportedly triggered a surge in thefts of Hyundai and Kia cars.
As cited by Financial Times, adviser Lee Hang-koo at Korea Automotive Technology Institute said, “The issue will negatively affect the carmakers’ brand image, making some customers shun Hyundai and Kia cars.”
Company Responses
In response to the claims by New York City, Hyundai contended that despite these problems in some of its models, its vehicles are fully compliant with U.S. federal requirements. It added that immobilizers have been standard on all vehicles produced since November 2021.
For about 4 million vehicles without immobilizers, Hyundai provided a software upgrade and free steering wheel locks to owners of affected vehicles. Kia is also taking similar steps for more than 3 million vehicle owners.
In April, both companies agreed to a consumer class-action lawsuit settlement valued at $200 million, covering 9 million U.S. vehicle owners, including up to $145 million for out-of-pocket losses for consumers whose cars were stolen.
Hyundai Stock Movement
Despite the negative sentiment surrounding Hyundai, HYMTF shares have surged 40% on a year-to-date basis. Hyundai Motor America saw a 15% year-over-year sales growth in April. Further, in the last week of April, Hyundai and SK On, a battery unit of SK Innovation Co Ltd., formed a joint venture to build an electric vehicle battery cell plant in Georgia, U.S., with an investment of $5 billion.