Hyundai, Kia earmark $760 million to settle U.S. lawsuits over engine fires

SEOUL — Hyundai and affiliate Kia have earmarked 900 billion won ($758 million) to settle U.S. class action litigation and address engine-related issues including fires and failures in the United States and South Korea.

The move marks the South Korean auto giant’s first major effort to resolve years of trouble over engine defects that have also sparked probes by the U.S. safety regulator and prosecutors.

Hyundai Motor will make a provision of about 600 billion won in its July to September earnings while Kia will book one for about 300 billion won, they said on Friday.

Hyundai and Kia said in a statement that under the U.S. settlement they would install software to monitor for symptoms of engine failure and take other steps, including offering compensation options and lifetime warranties.

A total of 4.17 million Hyundai and Kia models equipped with Theta II gasoline direct injection (GDI) engines, which were sold in naturally aspirated 2.0-liter and 2.4-liter displacements, and had a turbocharged derivative, will be affected by the U.S. settlement.

Hyundai and Kia, together the world’s fifth-biggest automaker by sales, recalled nearly 1.7 million vehicles in the United States to address the possibility of engine fires.

In November, Reuters reported that U.S. federal prosecutors had launched a criminal investigation to determine if the recalls had been conducted properly.

Since 2017, the U.S. safety regulator has been investigating whether the recalls covered enough vehicles and were conducted in a timely manner.

The investigation comes after Kim Gwang-ho, then an engineer at Hyundai, flew to Washington in 2016 to tell the National Highway Traffic Safety Administration (NHTSA) the companies should have recalled more vehicles over the problem, citing an internal report.

Hyundai Motor at that time denied allegations.

The NHTSA this year opened a fresh investigation into 3 million Hyundai and Kia vehicles after reviewing reports of more than 3,000 fires that injured more than 100 people.

That probe came in response to a petition seeking an investigation filed in June by the nonprofit Center for Auto Safety.