U.S. motorists reject Kia and Hyundai due to false mileage claims

It appears that U.S. motorists are turning away from cars from Kia Motors Corp and Hyundai Motor Corp, but why? American consumers have been turned off cars from these South Korean automakers since both companies admitted that they had exaggerated the fuel economy ratings for over 1 million of their cars, sold in Canada and the U.S. Data from Edmunds.com, the consumer and auto consultant website that publishes automotive information confirms this, and U.S. motorists aren’t feeling sympathetic.

Earlier this month (November), Kia and Hyundai both came clean, admitting that they had indeed exaggerated their fuel efficiency figures for some of their vehicles. Unfortunately, both automakers have suffered a blow to their reputations for being economical with the truth. Ironically, both South Korean companies built marketing campaigns that centred on the superior mileage of their vehicles. As you would imagine, when the news got out, their share prices suffered!

Hyundai’s Elantra is one out of four models that was falsely marketed; the fuel efficiency was touted as being “40-mile-per-gallon”. The other offenders were the Accent and Veloster from Hyundai and Kia’s Rio. Unsurprisingly, they have all suffered a decline in purchase intent. For the uninitiated, purchase intent is a figure used to gauge consumer interest, and it correlates highly with people actually buying that particular model at some point within the next three months.

The Soul from Kia however, has suffered the largest decline in popularity, and Edmunds.com says that purchase intent is down to 7.35% from 9.2%. Incidentally, the fuel efficiency ratings for the Soul were the most overstated, with a cheeky 6 miles per gallon added to the actual figures.

Both automakers made a point of publicising their 40-miles-per-gallon vehicles in the media, and until the false information was brought to light, their marketing was a big success! This just makes the whole fiasco more embarrassing for Kia and Hyundai.

Hyundai was quick to apologise when the false claims were revealed. They even agreed that owners should be compensated for the extra fuel costs. However, that doesn’t grant them immunity from lawsuits over the exaggerated mileage claims. The damage to their credibility will also cost the business in the long run.

According to Moody’s Investors Service, the compensation scheme for motorists could end up costing the company $100 million for each year, and it will run until the cars are scrapped. The legal costs haven’t been calculated as of yet. The whole debacle has left a lot of people wondering why two popular automakers would make such a blunder.