Fuel mileage exaggeration to cost Hyundai-Kia $100 mln -Moody's

Tue Nov 6, 2012 4:33pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* Customers affected will receive a debit card

* Hyundai and Kia also face legal challenges

Nov 6 (Reuters) - Hyundai Motor Co and its affiliate Kia Motors Corp stand to lose about $100 million because of their plan to fund fuel purchases of owners who bought vehicles whose fuel economy was exaggerated by the automakers, Moody's Investors Service said.

Last Friday, the two companies, both headquartered in South Korea and under the umbrella of the Hyundai Motor Group, admitted overstating the fuel economy ratings of some of their vehicles by from one to six miles per gallon.

The admission came after the U.S. Environmental Protection Agency found errors in the mileage estimates of 13 Kia and Hyundai models from the 2011 to 2013 model years.

Hyundai and Kia have said customers will receive a debit card to reimburse them for the differences with the EPA fuel economy rating, based on the fuel price in their area and their miles driven. An extra 15 percent will be added to the amount to acknowledge the inconvenience, and owners will be able to refresh their cards for as long as they own their vehicles, the companies said.

About 900,000 vehicles sold in the United States through Oct. 31 were affected, and another 172,000 vehicles in Canada.

Chris Park, a Moody's senior credit officer, said North America accounted for about 24 percent of Hyundai's global sales in the first nine months of this year.

Moody's said that until these cars are scrapped, the cost of buying customers' fuel will be about $100 million.   Continued...