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Hyundai Motor Co. vehicles are displayed at the company’s Motorstudio showroom in Goyang, South Korea, on Thursday, Oct. 22, 2020.
Bloomberg | Bloomberg | Getty Images
South Korean automakers Hyundai and Kia are being sued for causing a “public nuisance,” according to a complaint filed in Manhattan federal court.
New York City is accusing the two firms of failing to install devices that prevent cars from being stolen, after a social media challenge prompted young teens to steal vehicles off the street by hot wiring them using a USB cable.
A viral TikTok challenge started in 2021 and spurred a rise in thefts of Hyundai and Kia cars. Chicago saw a jump of 800% year-on-year in the theft of these cars for the month of August 2022, officials told CNBC at the time. Los Angeles officials also saw an 85% jump compared with the year before.
“In electing profits over safety and deviating from industry norms by not including engine immobilizers as a standard safety feature, Defendants created and maintained a public nuisance,” the city said in the filing made in the U.S. District Court in the Southern District of New York.
New York accused the two companies of enabling “this spiraling epidemic” of car thefts.
“This case is a clear example of what happens to public safety when car manufacturers choose not to include standard anti-theft technology in their cars,” the filing said. “Making sure cars are not easy to steal protects both property and the public by keeping dangerous drivers in stolen vehicles off the roads,” it said.
When contacted by CNBC, Hyundai highlighted a response sent to news outlets where it said it made immobilizers standard on all vehicles from November 2021 and had taken measures to reduce the threat of thefts.
Highlighting the companies’ “failure” to install an anti-theft device, the complaint accused them of having “opened the floodgates to vehicle theft, crime sprees, reckless driving, and public harm.”
Shares of South Korea’s largest automakers fell on Wednesday. Hyundai Motors slid by more than 2% while Kia Corp dropped by more than 5%.
Hyundai and Kia last month agreed to a $200 million consumer class-action lawsuit settlement, according to Reuters, which covered approximately 9 million car owners and included up to $145 million for out-of-pocket losses for customers.
‘Virtual explosion’ of thefts
New York City in its filing said that the thefts are still continuing, and that it is seeking “compensation for the economic losses,” without specifying an exact figure.
“In 2023, in comparison to past years, there has been a virtual explosion of thefts of Kias and Hyundais,” it said. Around 977 Hyundai and Kia vehicles were reported stolen in the first four months of the year, according to the filing.
“This represents a roughly 660% increase in thefts of Kia and Hyundai vehicles as compared to those same months in 2022, when there were only 148 such thefts,” it said.
New York City joins a number of cities that took similar measures against the two automakers, including Baltimore, St. Louis, Milwaukee, San Diego and Seattle.
In a release, Baltimore Mayor Brandon M. Scott said in May: “These cost-cutting measures employed by Hyundai and Kia at the expense of public safety are unacceptable.”
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