Misstated Fuel Economy Fiasco Will Cost Hyundai $100 Million
November 7, 2012 9:13 AM
comment(s) - last by
Big money for a little lie
Last week, reports surfaced that Hyundai and its Kia Motors division had been found by the EPA to be quoting
incorrect fuel economy numbers
for 2012 to 2013 model vehicles. At the time, we mentioned that it was estimated that the flub would cost Hyundai millions of dollars in repartitions to customers who purchase their vehicles expecting to get the claimed fuel economy.
Hyundai and Kia both agreed to revise numbers on window stickers and reimburse owners of approximately 1.1 million affected vehicles that were sold since 2010 in North America. That number includes about 900,000 vehicles in the United States alone. Revising the window stickers has decreased the fleet wide MPG average for Hyundai-Kia by 1 mile per gallon from 27 mpg combined to 26 mpg.
The Hyundai Veloster was one of several models to have its fuel economy ratings cut
Moody's is estimating that the cost for the mistake will be about $100 million. Hyundai US executive John Krafcik said last week that, "Our focus is on making it right for the customers. We're honestly not so focused on that cost."
Moody's Investors Service said in a report, “Both companies have adequate financial cushions and the impact on their competitive positions will be manageable."
"The impact on the companies' brand recognition and sales performance in North America could be more material, given that high fuel efficiency has been one of their key selling points and the region is the group's largest market," says Chris Park, a Moody's vice president and Senior Credit officer.
Hyundai and Kia have attributed the misleading window sticker claims to a mistake in testing methodology. Hyundai is the fifth-largest automaker and North America accounted for 24% of the automaker’s global sales volume during the first nine months of 2012.
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RE: still my buddy in ontario
11/7/2012 12:29:23 PM
I was honestly looking at the Veloster turbo but then saw the actual fuel economy it got (not the old/new numbers) and was fairly shocked. The way it was marketed it looked as though it got almost 40mpg as well. It doesn't, so I def won't be getting it. I hope they fix the lame steering feel to the regular version, even at "only" 37 mpg when you load that baby all the way up it comes out to a nice price and a good deal. This was a flub in my opinion and I hope they recover from it. Hyundai (and Kia) have both really struggled to get their game back up in the US and have made HUGE strides where no one else has. They went from being not usually considered for most Americans to being very high on the list. Their warranty and base features were alone a great reason for me to pick then, then their fuel economy really grabbed my attention. It may not be 40mpg, but 37 is a hell of a lot better than my Nissan Rogue's AWD 26mpg hw. Trying to find a cheap vehicle with good features and good mileage is kinda hard at the moment, lots of trade offs and differences between manufacturers. Hyundai is doing it right.
"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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