Hyundai Motor hit with 13.1 billion won sanction for evidence destruction in US lawsuit

A Pennsylvania court has ordered Hyundai Motor America to pay about 13.1 billion won (about $9.7 million) in sanctions for destroying vehicles that were key evidence in a lawsuit with a dealer. Hyundai Motor is withholding payment and pursuing an appeal against the order.

According to the Montgomery County Court of Common Pleas in Pennsylvania on Nov. 5, the court recently ordered Hyundai to pay $9.78 million (about 13.1 billion won) in sanctions for unauthorized disposal of recalled vehicles that were key evidence in the lawsuit. The decision stems from a legal dispute between Hyundai and a local dealer.

The sanction amount was calculated as long-term storage fees for 163 recalled 2011-2014 Sonata vehicles equipped with Theta II engines that had been kept for about seven years in the lot of dealer Knight Motors. The court applied a storage fee of $25 per vehicle per day to determine the sanction amount.

The dispute began with a fraud lawsuit Hyundai filed in 2019 against two used-car dealers in Pennsylvania. Hyundai alleged that the dealers intentionally damaged vehicles to collect purchase payments from the manufacturer. Hyundai's dealer vehicle buyback program compensates dealers when vehicles cannot be sold due to defects or damage.

However, during the litigation, it emerged that Hyundai had crushed hundreds of the disputed vehicles before an independent expert investigation could take place. The dealers countered that without the physical vehicles, they could not verify Hyundai's claims or conduct their own damage analysis.

The court found that Hyundai knowingly allowed the vehicles to be destroyed "consciously" despite being aware they were evidence in an ongoing lawsuit, violating its duty to preserve evidence. The court ruled that Hyundai had blocked the dealers' opportunity to collect evidence on their own and imposed the sanctions.

The lawsuit is a business-to-business dispute unrelated to the class action filed by ordinary consumers over Theta II engine defects. Consumer compensation for the Theta II engine recall, which covered more than 1.6 million Hyundai and Kia vehicles in the United States, was handled through a separate settlement process. The sanctions are entirely storage fees to be paid to the dealer.

Hyundai acknowledges responsibility for the 163 vehicles but has appealed the sanction order. Payment of the sanctions is currently on hold under a stay. Separately from the sanctions for evidence destruction, the underlying fraud lawsuit filed by Hyundai continues, and Hyundai now faces the task of proving dealer misconduct without the physical scrapped vehicles.

(Dollar figures are approximate, converted automatically at 1,000 won = $0.738, the rate on Nov. 8, 2026.)

※ This article is an AI translation of the Korean original published by Korea Credit News; it was checked by automated quality guards and published by the English edition desk.