Some Billings, Montana, residents may recall an incident that took place on the Fourth of July in 2011, when two Montana youths were killed in a car crash. The teenagers were driving a Hyundai Tiburon when they stopped to purchase fireworks from a store. Upon leaving the store, their car veered into the path of another vehicle on the road. Both teenagers were killed in the collision. Witnesses said that they saw fireworks exploding from the car just before it swerved into the other car's lane. The family claimed an auto defect was responsible for the accident.
Three months ago, a jury awarded $240 million in punitive damages to the family of the teenagers as well as$8 million in compensatory damages, much more than what the family had asked for. A Hyundai official said that the company would appeal against the "outrageous" judgment.
Another company that has faced flak over vehicle safety in the past is Audi. The company faced allegations of an automobile design defect when people claimed that the car suddenly accelerated. However, Audi engineers claimed the car's brakes could not be overpowered. It was, however, proved that the sudden acceleration happened because of driver fault. The company's brand equity subsequently took a nose-dive.
This year has been bad for many automobile companies like General Motors, Hyundai, and Honda, as several of these companies have faced allegations of automobile design defects. GM is perhaps the only company that has stepped up to its responsibility by compensating victims. After much public criticism of their multiple failures to address defects resulting in fatalities, the company has set up a fund to compensate victims. Taking a leaf out of the book of Johnson & Johnson, it has adopted a strategy of product recall. It may be wise for Hyundai to do the same.