Hyundai-Kia faces credibility issues after admitting to false mpg ratings

Article by Anita Panait, on November 13, 2012

Hyundai and Kia are now facing credibility issues after they admitted to selling 900,000 vehicles with bogus and overstated miles-per-gallon ratings. Credibility issues at these South Korean companies could prove to be very damaging to their brand image and reputation, which they have deftly built for the past years.

John Krafcik, chief executive of Hyundai Motor America, implored fellow auto executives three years ago to bolster the auto industry's reputation by being more accountable and by embracing fuel efficiency as a social good.

Since then, Hyundai and Kia have rolled out a number of models that boast of achieving fuel economy rating of 40 mpg.  This was one of the major factors on the companies’ dramatic rise in terms of market share in the United States, which jumped from 5.1 percent in 2008 to 8.9 percent in 2012.

But Hyundai and Kia’s run might as well as hit cul-de-sac this year – as their sales are tied with Krafcik's professed fuel economy standard. The companies had been selling six nameplates like hotcakes, thanks to their overstated ratings of 40 mpg.

According to researchers, consumers buy Hyundai and Kia vehicles for their apparent fuel economy advantage more than for any other reason. ALG, a research firm that monitors and sets residual values for the auto industry, said it will analyze every Hyundai and Kia model to determine whether there is a need for a value change.

The South Korean carmakers admitted and apologized for the mpg errors after an EPA probe found discrepancies between their in-house fuel-economy test results and the agency's results.  Hyundai and Kia blamed the problem "procedural errors" in their tests and said they will provide debit cards to refund customers for the extra money spent on fuel. However, some consumers found the carmaker’s actions good enough, resulting to the filing of two lawsuits seeking class-action status.

Topics: hyundai, kia

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