[Editorial] Hyundai payout

By Korea Herald

Automaker sets good example

  • Published : Aug 14, 2014 - 21:12
  • Updated : Aug 14, 2014 - 21:12
Hyundai Motor Co.’s voluntary decision to compensate buyers for the “inflated” fuel economy of one of its midsize SUVs sets a good precedent. The automaker will be losing some money, but it will get something far more valuable in return.

Hyundai said this week that it would compensate owners of one of its Santa Fe models with lump-sum payouts of up to 400,000 won in line with the government’s ruling that it exaggerated its estimated mileage.

The company said it also was restating the fuel economy label for the affected model ― the 2-liter front-wheel drive version of the crossover SUV with automatic transmission ― from 14.4 kilometers per liter of diesel to 13.8 kilometers per liter.

The decision, which is expected to cost the firm 56 billion won, came after the world’s fifth-largest automaking group was embroiled in a controversy involving two different government ministries.

The controversy was touched off when the Transportation Ministry, citing the result of its own test, challenged the Commerce and Industry Ministry’s endorsement of the fuel economy rating of the Santa Fe model in question.

The two ministries were strongly criticized for their conflicting positions, with officials saying that the discrepancies in the mileage ratings resulted from differences in equipment, test rules and standards.

Announcing the voluntary payout this week, a Hyundai spokesman said that regardless of the discrepancies within the government, the company will reimburse customers for extra fuel costs and inconvenience.

It would have been better if the company had made the decision earlier. When the two ministries were arguing over the issue, the company only expressed regret, and did not clarify its position on compensation.

In the meantime, a class action suit had been filed, with each of the plaintiffs seeking 1.5 million won in compensation. This might have pressured the company to decide on the voluntary payout. As recently as last December, Hyundai agreed to pay out $395 million in a similar suit in the U.S.

Whatever the motives and circumstances may be, the company made the right decision to uphold customers’ rights. It will also help improve the automaker’s image as a pursuer of fuel economy and environment-friendliness, which is all-important for any of today’s global enterprises.

Besides, Hyundai’s decision, the first of its kind in the country, will help alleviate public criticism that it discriminates against local customers. The time has come for the company to change such a negative public perception, especially as import cars are ferociously eating up Korean-made vehicles’ share of the local market.