Korean Economy News
Class action against BMW Korea builds up as more owners seek damages

Seong Seung-hoon and Kim Hyo-jin

BMW faces a potentially costly legal battle in South Korea as more owners join the collective suit demanding compensation for driving fire-prone cars even if they did not directly catch fire.

More than 3,000 BMW car owners have signed up for damage suits against the German automaker demanding 10 million won ($8,956) to 50 million won.

The lawsuits come after a number of BMW engines caught fire in the summer, leading to a recall of some 172,000 vehicles of 65 models in July and October.

Heon, a local law firm, said it has filed a class-action suit against BMW Korea, rounding up 1,200 plaintiffs in August, 800 in October and 300 last month. Another 1,000 are said to have signed up to the suit arranged by law firm Bareun.

Owners of burned-out cars are seeking 50 million won in damages but their number is small. A greater number are claiming indirect harm, such as financial loss from the potential markdown in the used-car market and emotional distress over the fire scare. These plaintiffs are demanding compensation of about 10 million won.

“If there are no other factors that could drive down the vehicles’ market value and the fire risk is well established in the market, car owners are theoretically entitled to compensation (for indirect damages),” said Sa Bong-kwan, a lawyer at law firm Jipyong.

This is also backed by past Supreme Court decisions. In May 2018, Korea’s top court ruled in favor of a charter bus company that sought damages from its insurance firm for cutting the valuation of its used buses despite an auto fix-up. The bus company was entitled to the damages, the court said, even if the market value of the vehicles was rendered low from the lack of a proper repair.

Last month, a public-private investigation team led by Korea’s transport ministry imposed a fine of 11.2 billion won against BMW, claiming the company had concealed the auto defect and delayed recalls of its fire-prone cars despite being aware of the problem since 2015.

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