Kia Pulls Out of State Arbitration Plan

Kia Motors America said Wednesday that it has withdrawn from California’s certified arbitration program for car buyers, asserting that its own program for resolving warranty disputes is better.

Kathleen Hamilton, director of the Consumer Affairs Department, expressed disappointment over Kia’s decision and said she is concerned that the Irvine-based importer of South Korea’s Kia cars and sport-utility vehicles won’t be required to adhere to state standards.

Earlier this year, a consumer group reported that Kia had the highest rate of warranty arbitrations under the state’s so-called lemon law in 1997: 95 arbitrations in a year it sold just 3,757 cars in California.

In 1998, according to figures provided by Hamilton’s department, Kia sold 6,992 vehicles and had 53 consumer complaints go to arbitration.

Kia said it withdrew from the voluntary state program because it disagreed with several recent rule changes, including one prohibiting a manufacturer from requiring that disputed vehicles be examined by an independent technician before the arbitration hearing.

State consumer officials disagree with Kia’s contention that the changes make the state program less friendly to consumers.

Under California’s lemon law, arbitration is used to avoid lawsuits when consumers believe they’ve been sold a defective vehicle that cannot be properly repaired. Consumers can still sue if they are unhappy with the arbitration results.

While most major car companies belong to the state program, Toyota Motor Corp. and many smaller importers do not. Most of these companies, however, still require arbitration before a consumer can file a suit.

Kia said it will continue to offer the same arbitration program it had before the state rule changes. Kia’s program is run by the Better Business Bureau, which also offers a state-certified program.