Hyundai, Kia Motors fined over trade practices
Reuters, Sep 10 2002
SEOUL, Sept 10 (Reuters) - South Korea said on Tuesday it had fined the country's largest automaker Hyundai Motor Co and affiliate Kia Motors Corp more than $6 million because of low-interest financing that hindered competition.
The announcement of the fines came just a day after Hyundai and Kia both said they had misstated the horsepower ratings on vehicles sold in North America and would compensate owners.
South Korea's Fair Trade Commission said that Hyundai and Kia had conducted unfair financing practices.
"In a bid to boost the market share of affiliate Hyundai Capital Services Inc, Hyundai and Kia formed a separate settlement agreement with Hyundai Capital, offering low interest financing that discriminated against customers of non-affiliated financing companies," the commission said in a statement.
Hyundai was slapped with a 4.9 billion won ($4.13 million) fine, while Kia received a 2.6 billion won fine, the commission said.
Hyundai and Kia have seen robust sales of their vehicles since late last year, after the government cut taxes on car purchases in a bid to boost consumption. The tax incentive expired last month.
The commission said Hyundai and Kia covered a portion of the interest burden for Hyundai Capital, which enabled the auto financing arm to offer low rates beginning in April.
The move helped Hyundai Capital's share of domestic auto financing rise to 57.2 percent in June from 46.4 percent in March, the commission said.
The majority of cars on South Korea's roads are Hyundai or Kia models.
Hyundai shares ended up 0.6 percent at 32,250 won on Tuesday, while the broader stock market index closed up 2.21 percent. Kia shares ended unchanged at 9,270 won.
Meanwhile, Hyundai said it misstated the horsepower ratings on 1.3 million cars and trucks sold in North America over the last 10 years.
Kia also said it overstated the horsepower of its 2001-2002 Kia Optima mid-sized sedan, which uses engines supplied by its parent company, Hyundai.
Hyundai discovered the miscalculations on engine power a few months ago after the Canadian government questioned the horsepower on the Elantra compact car. The South Korean automaker advertised the Elantra as having 140 horsepower, but after reevaluation Hyundai discovered the figure was actually 135.
The automaker said it misstated the ratings because the actual horsepower figures changed between the time the vehicles were first tested and the time they went on sale.
Hyundai said the owners or lessees of more than 400,000 vehicles whose horsepower ratings were overstated by more than four percent would be compensated. The compensations will include roadside assistance coverage or extended warranties.
Kia will offer its customers a choice of additional warranty coverage or an extension of their 24-hour roadside assistance plan.
U.S.-German automaker DaimlerChrysler AG owns 10 percent of Hyundai Motor.
($1=1186.8 won)
Hyundai misstated horsepower on 1.3 mln vehicles
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Hyundai misstated horsepower on 1.3 mln vehicles
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Chalupa
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Hyundai misstated horsepower on 1.3 mln vehicles
Hyundai misstated horsepower on 1.3 mln vehicles
By Michael Ellis
DETROIT, Sept 9 (Reuters) - Hyundai Motor Co. Ltd. said on Monday it misstated the horsepower ratings on 1.3 million cars and trucks sold in North America over the last 10 years, and will compensate the owners of 400,000 vehicles that had the largest overstatement.
Kia Motors Corp. also said on Monday it overstated the horsepower on its 2001-2002 Kia Optima mid-size sedan, which uses engines supplied by its parent company Hyundai.
South Korean automaker Hyundai discovered the miscalculations on engine power a few months ago after the Canadian government questioned the horsepower on the Elantra compact car. The Korean automaker advertised the Elantra as having 140 horsepower, but after reevaluation Hyundai discovered the figure was actually 135.
"Horsepower was misstated and I think we're obligated to come forward and correct the record," Hyundai of America Chief Executive Officer Finbarr O'Neill told reporters. "It has no impact on the safety or reliability of the vehicles."
Kia spokesman Kim Custer told Reuters that his company found out about the power ratings from Hyundai a few days ago. A review of its power ratings over the past seven model years found no other inaccuracies, he said.
Hyundai said that the owners or lessees of more than 400,000 vehicles whose horsepower ratings were overstated by more than 4 percent will be compensated. The compensation will include roadside assistance coverage or extended warranties.
O'Neill said that Hyundai misstated the ratings because the actual horsepower figures changed between the time the vehicles were first tested and the time they went on sale.
At other times, new equipment fitted to the vehicle to cut emissions reduced the horsepower, but the ratings were not changed, O'Neill said. For example, in the worst case, Hyundai overstated the horsepower on the Hyundai Sonata with a 2.0 liter engine by 9.6 percent. The Sonata's horsepower rating fell to 125 hp, but marketing materials continued to advertise the rating as 137 horsepower.
The figures on more than two dozen models and variants were overstated going back to the 1992 model year, Hyundai said, with an average overstatement of 4.6 horsepower on a sales weighted basis. Two vehicles had their horsepower figures understated.
"These errors had occurred because we didn't have established procedures in place to verify that our preliminary horsepower figures matched the actual horsepower," O'Neill said. He said that Hyundai's director of engineer and design analysis will ensure that actual horsepower numbers match marketing materials in the future.
Under the compensation plan, those with vehicles from the model year 1999 and earlier will be given for free five-year roadside assistance coverage. Those who bought vehicles since the 2000 model year will be offered one of three enhancements -- roadside assistance for 10 years and unlimited miles instead of five years with unlimited miles; or bumper-to-bumper warranty for six years or 72,000 miles instead of five years or 60,000 miles; or for original owners a powertrain warranty of 12 years or 120,000 miles instead of 10 years or 100,000 miles.
Kia will offer its customers a choice of additional warranty coverage or an extension of their 24-hour roadside assistance plan.
O'Neill said that, except for the Canadian government, no one had complained about the horsepower ratings.
Hyundai said that it will send letters to affected owners over the next few weeks. The company declined to specify the costs of the program.
Hyundai is just the latest automaker to overstate a car's horsepower. Jaguar, the British luxury carmaker owned by Ford Motor Co., said its new 2003 S-Type R sedan had 400 horsepower. The problem was that the S-Type R gets 400 hp according to the European measurement for horsepower, but only 388 hp for the American measurement from the Society of Automotive Engineers.
By Michael Ellis
DETROIT, Sept 9 (Reuters) - Hyundai Motor Co. Ltd. said on Monday it misstated the horsepower ratings on 1.3 million cars and trucks sold in North America over the last 10 years, and will compensate the owners of 400,000 vehicles that had the largest overstatement.
Kia Motors Corp. also said on Monday it overstated the horsepower on its 2001-2002 Kia Optima mid-size sedan, which uses engines supplied by its parent company Hyundai.
South Korean automaker Hyundai discovered the miscalculations on engine power a few months ago after the Canadian government questioned the horsepower on the Elantra compact car. The Korean automaker advertised the Elantra as having 140 horsepower, but after reevaluation Hyundai discovered the figure was actually 135.
"Horsepower was misstated and I think we're obligated to come forward and correct the record," Hyundai of America Chief Executive Officer Finbarr O'Neill told reporters. "It has no impact on the safety or reliability of the vehicles."
Kia spokesman Kim Custer told Reuters that his company found out about the power ratings from Hyundai a few days ago. A review of its power ratings over the past seven model years found no other inaccuracies, he said.
Hyundai said that the owners or lessees of more than 400,000 vehicles whose horsepower ratings were overstated by more than 4 percent will be compensated. The compensation will include roadside assistance coverage or extended warranties.
O'Neill said that Hyundai misstated the ratings because the actual horsepower figures changed between the time the vehicles were first tested and the time they went on sale.
At other times, new equipment fitted to the vehicle to cut emissions reduced the horsepower, but the ratings were not changed, O'Neill said. For example, in the worst case, Hyundai overstated the horsepower on the Hyundai Sonata with a 2.0 liter engine by 9.6 percent. The Sonata's horsepower rating fell to 125 hp, but marketing materials continued to advertise the rating as 137 horsepower.
The figures on more than two dozen models and variants were overstated going back to the 1992 model year, Hyundai said, with an average overstatement of 4.6 horsepower on a sales weighted basis. Two vehicles had their horsepower figures understated.
"These errors had occurred because we didn't have established procedures in place to verify that our preliminary horsepower figures matched the actual horsepower," O'Neill said. He said that Hyundai's director of engineer and design analysis will ensure that actual horsepower numbers match marketing materials in the future.
Under the compensation plan, those with vehicles from the model year 1999 and earlier will be given for free five-year roadside assistance coverage. Those who bought vehicles since the 2000 model year will be offered one of three enhancements -- roadside assistance for 10 years and unlimited miles instead of five years with unlimited miles; or bumper-to-bumper warranty for six years or 72,000 miles instead of five years or 60,000 miles; or for original owners a powertrain warranty of 12 years or 120,000 miles instead of 10 years or 100,000 miles.
Kia will offer its customers a choice of additional warranty coverage or an extension of their 24-hour roadside assistance plan.
O'Neill said that, except for the Canadian government, no one had complained about the horsepower ratings.
Hyundai said that it will send letters to affected owners over the next few weeks. The company declined to specify the costs of the program.
Hyundai is just the latest automaker to overstate a car's horsepower. Jaguar, the British luxury carmaker owned by Ford Motor Co., said its new 2003 S-Type R sedan had 400 horsepower. The problem was that the S-Type R gets 400 hp according to the European measurement for horsepower, but only 388 hp for the American measurement from the Society of Automotive Engineers.