GM Offers Cash or Extended Warranty Over Crossover Fuel Economy Labels
21 May 2016 - 4:20AM
Dow Jones News
General Motors Co. offered cash or an extended warranty to about
135,000 customers after discovering window stickers had overstated
the fuel economy on some large crossover vehicles.
Customers who purchased a 2016 Chevrolet Traverse, GMC Acadia or
Buick Enclave can choose between a debit card or a
48-month/60,000-mile service protection plan on top of their
existing factory warranty, the company said Friday. Those who
leased vehicles will be offered the debit card, GM said.
The debit cards are likely to range between $450 and $900,
depending on whether customers purchased or leased their vehicles.
The type of vehicle and terms of leases will also affect how much
customers receive. Some owners of all-wheel-drive models could
receive up to $1,500, a GM spokesman said.
GM alerted dealers to the program Friday, and letters are
expected to go out to customers starting May 25.
GM, meanwhile, has rushed corrected labels to dealerships after
halting sales of some 60,000 of the affected crossovers. A GM
spokesman said separate discussions would occur with fleet
customers such as corporations that might have expected higher
mileage on the affected vehicles.
GM declined to disclose the total expected cost of the program,
which aims to reimburse customers who paid more for fuel than they
expected after viewing incorrect mileage labels. The Detroit auto
maker said the plan wouldn't materially affect financial
results.
"We designed this reimbursement program to provide full and fair
compensation in a simple, flexible and timely manner," a GM
spokesman said, adding that the company apologizes to customers for
the misstated labels. An Environmental Protection Agency spokesman
declined to comment.
GM earlier this month alerted U.S. environmental regulators and
started crafting the compensation program after finding
fuel-economy labels on the affected vehicles overstated mileage by
1 to 2 miles a gallon.
The error stemmed from new emissions tests GM was required to
conduct, the auto maker said. GM had to conduct the new tests
because of new emissions hardware installed on the affected 2016
models.
GM failed to shepherd data from those tests when calculating
fuel economy on the affected vehicles, the company said. Engineers
discovered the error when working on mileage labels for 2017
models, the company said.
GM's program comes amid widespread environmental transgressions
among car makers. Volkswagen AG last year admitted to cheating on
U.S. emissions tests with diesel-powered vehicles. Mitsubishi
Motors Corp. in April said it manipulated fuel-economy data on
vehicles in Japan.
South Korean auto makers Hyundai Motor Co. and Kia Motors Corp.
in 2014 agreed to pay penalties and forfeit regulatory credits to
settle a government probe of overstated fuel-economy claims. Ford
Motor Co. the same year said it would compensate customers for
overstated mileage claims.
No evidence has emerged that GM's mileage errors were
deliberate, and regulators haven't indicated any plans to penalize
the U.S.'s largest auto maker.
GM's reimbursement program assumes fuel prices of $3 a gallon
and 15,000 miles of annual driving for five years, GM said. The EPA
makes similar assumptions with fuel-economy window labels, GM
said.
GM separately faces a purported class-action lawsuit over the
mileage errors from the Florida owner of a Chevrolet Traverse. The
suit, filed in a Michigan federal court, accuses GM of concealing
the incorrect mileage ratings and failing to reveal that "the
existence of the defect would diminish the intrinsic and resale
value" of the vehicles.
GM executives internally approved the consumer compensation
program before the lawsuit was filed, a GM spokesman said. The
spokesman declined to comment further on the suit.
Write to Mike Spector at mike.spector@wsj.com
(END) Dow Jones Newswires
May 20, 2016 14:05 ET (18:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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