Hyundai tries to contain mileage fallout

Hyundai Motor Group is making all-out efforts to address a possible backlash for overstating the fuel economy of some 900,000 vehicles it sold in the United States over the past two years.

On Friday, Hyundai apologized to customers that “procedural errors” in testing had caused inaccurate mileage estimates that were one to six miles per gallon higher than what Hyundai and Kia brand cars were actually capable of.

“Given the importance of fuel efficiency to all of us, we’re extremely sorry about these errors,” said John Krafcik, the chief executive of Hyundai’s American operations.

Hyundai officials said the mileage tests conducted at the company’s Korean tech center seemed to have failed to sufficiently take into consideration the real-world conditions in the U.S. But they denied that there were similar errors in the cars sold in the Korean market.

The company plans to reimburse the consumers who purchased cars with overstated fuel economies, and also restate mileage estimates. The total cost of the reimbursement plan could be worth some 86 billion won, or about $80 million, according to industry sources here.

The latest setback is expected to hit Hyundai hard: the company is currently one of the fastest-growing carmakers in the all-important U.S. market and has built its brands largely based on their competitiveness in price and fuel economy.

“Hyundai had been planning to expand its presence as a premium car maker in the U.S. Some negative impact in its brand image and business seems unavoidable there and possibly in other markets,” said Kim Pil-soo, professor of automotive studies at Daelim University.

Kim explained that the fuel efficiency regulations in the U.S. are known to be most complicated for global carmakers to meet and that’s also why American consumers take them seriously for their car choice.

He downplayed, however, the possibility of any intentional cheating by Hyundai, adding that “Having learned from previous cases like the massive recall of Toyota cars in 2009, Hyundai may be well aware of the potential backlash.”

Meanwhile, industry watchers also predicted Hyundai’s competitors, especially Japanese rivals, could further step up their offensive in the U.S. car market where the Korean carmaker has been gobbling up their market share. 

By Lee Ji-yoon (jylee@heraldcorp.com)