Hyundai-Kia 'errors' may give all a black eye
The startling admission by Hyundai and Kia executives that mileage claims by both companies had been inflated because of "procedural errors" is disconcerting on several levels.
Both automakers will have an enormous job rebuilding public trust. Hyundai and Kia built their reputations with high-mpg vehicles in the past few years. Their marketing was created around the prominent claim that their products were superior primarily because of their fleet of 40-mpg vehicles.
The admission came after an investigation by the EPA found discrepancies between its test results and the self-certified mileage figures used by Hyundai and Kia. Revisions by both companies lower the combined fuel economy ratings for most of the affected vehicles by 1 to 2 mpg.
All six Hyundai and Kia nameplates previously rated at that magical 40-mpg mark now fall below that benchmark.
Despite promises by the companies to compensate owners, damage to both brands could be massive. Fuel economy became their calling card, and consumers responded. That good will could be in jeopardy. And in the week following the revelation lawyers had filed lawsuits, potentially class actions, that will prolong the agony.
But a more universal problem could be the potential black eye for the entire industry because the inflated Hyundai and Kia mpg ratings reinforce the lack of trust Americans have for automakers and auto dealers in general.
Much of the Hyundai-Kia cleanup will fall on dealers, who must mollify owners and handle unhappy customers.
The industry is only a few years removed from the scathing questions and accusations hurled at Detroit 3 executives during bailout hearings on Capitol Hill. The industry was painted with a broad brush, and Detroit's CEOs became whipping boys.
Hyundai Motor America CEO John Krafcik alluded to that negative reputation when he addressed the Chicago Auto Show in February 2009, citing the desperate need for the industry to clean up its act. Ironically, this time much of the damage was inflicted by Krafcik's own company.