May 12, 2017

South Korea Orders Major Hyundai, Kia Recall After Whistleblower Report

By the C|C Whistleblower Lawyer Team

In the first whistleblower case to hit South Korea’s auto industry, Kim Gwang-ho, a Hyundai engineer with 26 years at the company, made allegations about 32 problems to local regulators.  In response, South Korea ordered Hyundai Motor Co and affiliate Kia Motors Corp to recall 240,000 vehicles over safety defects flagged by a whistleblower – a sharp slap on the wrist that will exacerbate reputational woes for the automakers.

The move marks the first compulsory recall ordered by the transport ministry for Hyundai and Kia, which had resisted an earlier request for a voluntary recall.  The ministry has also asked prosecutors in Seoul to investigate whether the automakers allegedly covered up the five flaws, which affect 12 models, including the Elantra, Sonata, Santa Fe and Genesis.

Hyundai and Kia, which had previously argued that the flaws presented no danger to driving safety, said in a joint statement on Friday they would cede to the order.  They added there had been no reports of injuries or accidents due to the problems which include defects in parking brake warning lights, and denied that there had been any cover-up.

Even before Kim’s allegations came to light, customer accusations that their South Korean vehicles are priced higher and offer fewer and inferior features than those sold in the United States were widely covered by local media. Reuters

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