GM Prepares Consumer Compensation for Misstated Fuel Economy--Source
19 May 2016 - 9:29AM
Dow Jones News
By Mike Spector
General Motors Co. is in the final stages of preparing a program
to compensate more than 130,000 owners of large crossover vehicles
with misstated fuel-economy labels, said a person familiar with the
matter.
GM plans to offer the owners cash in some form, the person said,
adding that the compensation program could be rolled out to
customers and dealers as soon as next week. Additional details of
the program remained unclear, but other auto makers such as
Volkswagen AG in the past have given customers cash gift cards to
address fuel-economy or emissions lapses.
GM halted sales of some 60,000 2016 Chevrolet Traverse, GMC
Acadia and Buick Enclave vehicles last week after it discovered
labels overstated mileage by 1 to 2 miles a gallon. The Detroit
auto maker said it alerted the Environmental Protection Agency
promptly and that the inaccurate labels were the result of an
"inadvertent error." GM has rushed corrected labels to dealerships
and expects the problem to be resolved within days, a company
spokesman said.
More than 130,000 customers have purchased the affected
vehicles, the person familiar with the matter said. The
compensation is likely to address fuel-savings customers would have
expected based on the overstated mileage figures, the person
said.
GM in a statement Wednesday said the mistake stemmed from
failing to shepherd data from new emissions tests the auto maker
was required to conduct when it calculated fuel economy for the
2016 models. GM had to conduct new emissions tests because of new
hardware installed on the 2016 models, the company said.
GM engineers discovered the error while working on 2017
model-year labels, the company said. GM continues to work with
regulators on the issue, it said.
"New emissions-related hardware in the 2016 Chevrolet Traverse,
GMC Acadia and Buick Enclave required new emissions testing for
these vehicles," GM said in a statement. "The fuel economy data
from these tests were not captured in calculations made for EPA
fuel economy labels for the 2016 model year Traverse, Acadia and
Enclave (causing 2016 model year fuel economy numbers to be
overstated). This error does not impact prior model year
vehicles."
EPA representatives had no immediate comment.
Automotive News earlier reported on GM's compensation plans.
Separately, a Florida man on Tuesday filed a purported
class-action lawsuit against GM in a Michigan federal court
accusing the auto maker of marketing and selling the vehicles with
false fuel-economy ratings.
The suit accuses GM of concealing the incorrect fuel-economy
ratings and failing to reveal that "the existence of the defect
would diminish the intrinsic and resale value" of the vehicles.
A GM spokesman declined to comment on the lawsuit.
Front-wheel-drive versions of the vehicles get an estimated 15
mpg in city driving, 22 mpg on the highway and 18 mpg combined,
according to GM. All-wheel-drive versions of the vehicles get an
estimated 15 mpg in the city, 22 mpg highway and 17 mpg combined.
The incorrect labels boosted those figures by 1 to 2 miles a gallon
depending on the category.
Write to Mike Spector at mike.spector@wsj.com
(END) Dow Jones Newswires
May 18, 2016 19:14 ET (23:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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