May 19, 2016 / 12:27 AM / in a year

UPDATE 1-GM to unveil plan to compensate owners on fuel economy claims

(Adds details of plan, background)

By David Shepardson

WASHINGTON, May 18 (Reuters) - General Motors Co is expected to announce plans to compensate about 130,000 individual U.S. owners of SUVs that had inflated fuel economy labels, sources briefed on the plans said on Wednesday.

The Detroit automaker said on Friday it was temporarily halting sales of about 60,000 new 2016 U.S. SUVs because the vehicles’ labels overstated their fuel efficiency. GM plans to compensate owners for the difference in miles per gallon and announce the program in the coming week, the sources said.

GM resumed sales once the new labels with the correct labels arrived at dealerships starting Saturday.

GM is expected to offer a cash compensation program to address the extra costs of driving based on the lower fuel economy, the sources said.

GM Canada is expected to offer a similar compensation program, but it is not clear how many owners are impacted.

GM has sold about 170,000 2016 SUVs in the United States, and about 130,000 are retail sales which will qualify for the compensation program. The remainder of the vehicles were sold to rental car, commercial and fleet buyers. It is not clear how GM will address those owners.

A GM spokesman declined to confirm the program.

GM said in a statement Wednesday that the error only impacts 2016 SUVs.

GM said in a statement Wednesday that the 1-2 miles per gallon mileage overstatement was the result of improper calculations. It said the inclusion of new emissions-related hardware in the 2016 Chevrolet Traverse, GMC Acadia and Buick Enclave SUVs required new emissions testing, but the fuel economy data from these tests were not captured in calculations made for EPA fuel economy labels. The error was discovered as GM engineers worked on the 2017 model year labels.

On Tuesday, a Florida owner of a 2016 Chevrolet Traverse filed a class-action suit in U.S. District Court in Detroit against GM on behalf of owners who bought vehicles with overstated fuel economy ratings.

The Environmental Protection Agency spokeswoman said Friday it has asked GM “to provide all relevant information to the agency.”

The incident is the latest in a multitude of issues in recent years involving the auto industry overstating vehicle fuel efficiency.

In April, Mitsubishi Motors Corp admitted to overstating the fuel economy of four car models sold in Japan.

In 2014, Korean carmakers Hyundai Motor Co and affiliate Kia Motors Corp agreed to pay $350 million in penalties to the U.S. government for overstating fuel economy ratings in about 1.2 million vehicles.

In June 2014, Ford Motor Co lowered the fuel economy ratings on six models and agreed to reimburse owners for the difference. (Reporting by David Shepardson; Editing by Leslie Adler)

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