Hyundai Looks to Put Mileage Misstep Behind It, but Lawsuits Still Linger

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Hyundai is reportedly close to settling 38 federal lawsuits filed after it overstated the fuel economy of its cars. Such a turning point might suggest a grand statement by the brand seeking to sweep that nasty episode behind Hyundai for good with a hearty mea culpa.

But just as Hyundai marketing stewards have done from the beginning of this shameful interlude that began in November, they’re making sure they communicate primarily with the offended parties—Hyundai owners—instead of with the general public. Hyundai simply continues to carry out the remedy it came up with last fall of an apology to those owners, changing of internal procedures about estimating mileage, and a reimbursement to its customers consisting of debit cards for gasoline purchases to help make up for the mileage they “lost,” around $88 for each year they’ve owned the vehicle with overstated mileage.

“We’re focusing on the owners,” Steve Shannon, CMO of Hyundai of America, told brandchannel. “We think we’re doing the right thing. Every day a certain number of [reimbursement chits] come in and we send them a debit card, and the owners tend to be very pleased with the fairness of the settlement.”[more]

Well, most of them anyway. The class-action filers in the US District Court in Los Angeles want more for their trouble, perhaps hundreds of millions of dollars for the buyers of around 900,000 Hyundai and Kia vehicles sold in the US with incorrect numbers on the window sticker.

In a filing in the court this week, Fox News reported, Hyundai said it would make lump-sum payments to around 600,000 owners of its cars and SUVs from the 2011 through 2013 model years, with the amounts varying depending on the amount of mileage overstatement. There will be no double-dipping between the reimbursements already given and any settlement of the suits.

Should Hyundai have done more last fall when it was caught? Maybe not. After all, Ford is among other auto brands that also have been having trouble lately with irregularities between their mileage statements and some vehicles. And, noted Shannon, “for two-thirds of the sales volume [affected by the reimbursements] we were off 1 mpg, and for the rest it was 2 mpg.”

A few months ago, Shannon also told brandchannel, “Owners have given us solid marks for what is obviously not an ideal situation but where Hyundai has really stepped up and done right. It’s a very generous [reimbursement] program. At almost every turn, we took a more generous approach, considering things such as high gas prices. Every decision we made we said, ‘Let’s be simple and easy, and generous.'”

Shannon has dismissed the notion that Hyundai should now, or should have announced a big mea culpa right after its transgressions were revealed by the US Environmental Protection Agency last fall, as brands often do when they’ve done wrong or screwed up in a major way.

“While this was a very serious issue, it was most relevant to people who own Hyundais,” Shannon said, “and our thought was that rather than communicate really broadly in a TV or print [campaign]—to people most of whom are unaffected by it—let’s get one official statement out and then focus on reaching out to customers.” A few days after the revelation last fall, Hyundai ran full-page apology ads in more than a dozen major US newspapers.

Of course, not falling even more proactively on its sword also saved Hyundai further embarrassment and the certainty that a highly visible apology simply might have tarnished its brand further, especially among non-existing customers who might have been considering a fuel-efficient Hyundai model at a time of persistently high gasoline prices.

So far this year, Hyundai’s advertising has been focused not on the overall fuel efficiency of its fleet but on less mileage-intensive messaging such as the launch of a new version of its large Santa Fe SUV and a program called Assurance Connected Car, which provides a free platform of safety and maintenance services across its lineup of vehicles that come equipped with its Blue Link telematics system.

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