Hyundai, Kia paying as much as $395 million to settle US suits2 min read . Updated: 24 Dec 2013, 02:26 PM IST
Hyundai, Kia agreed to settle lawsuits brought by customers claiming firms overstated fuel-economy ratings
Los Angeles: Hyundai Motor Co. and Kia Motors Corp., affiliated South Korean automakers, agreed to spend as much as $395 million to settle lawsuits brought by customers claiming the companies overstated fuel-economy ratings.
Hyundai’s US unit said in a statement that it will make payments totalling as much as $210 million to people who bought 2011 to 2013 model-year vehicles affected by the ratings. Customers have the choice of a lump-sum payment from Seoul-based Hyundai or to remain in a fuel-reimbursement programme for as long as they own their vehicle. Kia Motors said in a separate statement that its payments to owners of about 300,000 vehicles will total as much as $185 million.
Hyundai and Kia, South Korea’s largest and second-largest automakers respectively, apologized in November 2012 for overstating the fuel economy of their vehicles and issued debit cards to buyers of about 900,000 cars and light trucks sold in the US to reimburse them for higher-than-expected fuel costs.
“They both want to get this matter buttoned up to set the stage for a good product launch period," said Jessica Caldwell, an analyst for Edmunds.com, a vehicle pricing and data service in Santa Monica, California. “While the Hyundai-Kia issue is more of a footnote now, fuel economy is important to consumers. They want to know the mileage figures claimed are real."
Hyundai Motor fell 0.9% to 226,500 won as of 10:46 am in Seoul trading. The shares have gained 3.9% this year, outperforming the benchmark KOSPI Index, which was little changed in the period. Kia Motors fell 0.2% to 55,600 won, and is down 1.6% this year.
Hyundai and Kia both said procedural errors at a joint testing facility in South Korea led to the inaccurate fuel- economy ratings. Hyundai agreed to a tentative settlement arrangement in February, without providing financial details.
Official mileage ratings for most of the Hyundai and Kia models affected by the misstatements were lowered by 1 to 2 miles per gallon of gasoline, the companies said. Kia’s Soul wagon had the biggest reduction, with its US fuel economy label rating being cut by 6 miles (9.7km) per gallon.
Ford Motor Co. also faced criticism and lawsuits for not delivering on the high-mileage promises of its hybrids. Consumer Reports magazine singled out Ford’s Fusion and the C-Max hybrids for falling short of mileage claims.
Ford lowered the mileage rating for the 2013 model C-Max in August to 43 miles per gallon in combined city and highway driving from 47 mpg previously. It also upgraded software for the C-Max, Fusion and Lincoln MKZ hybrids in July to improve performance. Bloomberg