The two largest automakers based in Orange County have some explaining to do on their gas-mileage claims, and they’re telling their stories in a long-term campaign that started last week with full-page apology ads in daily newspapers.
The ads ran last week in about 30 newspapers across the U.S., including the Los Angeles Times.
They were part of an effort to explain the situation, apologize, give information on a reimbursement plan and generally “make things right,” according to Hyundai Motor America Inc. Chief Executive John Krafcik.
Hyundai has offices in Costa Mesa while a new headquarters is under construction in Fountain Valley. It is a sister company to Irvine-based Kia Motors America Inc.
Both are owned by South Korea-based Hyundai Kia Automotive Group, and each has enjoyed record sales in recent years. Hyundai sold 645,691 vehicles last year and is on pace to top that total for 2012. Kia had 485,492 sales last year and is expected to better the mark this year.
The U.S. Environmental Protection Agency recently found that Hyundai and Kia reported incorrect fuel-efficiency ratings on a number of models that combined for sales of 900,000 since 2010. The fuel economy ratings for the affected vehicles have been reduced by an average of 3%, according to the companies.
Hyundai and Kia are issuing debit cards to owners to reimburse them with payments based on the average cost of fuel in their areas, the amount of miles they’ve driven, and an extra 15% to compensate for inconveniences.
The first ad in the apology campaign—titled An Important Message to Our Valued Owners—attributed the faulty estimates on gas mileage to “procedural errors” at the parent company’s research and development center in South Korea, where factors such as measurements on aerodynamics and mechanical friction are now under review, along with other criteria.
The ads also included information on how vehicle owners can get reimbursed for additional fuel costs if their vehicle qualifies.
The message was signed by Hyundai’s Krafcik and Byung Mo Ahn, chief executive at Kia.
Neither Hyundai nor Kia offered estimates on the cost of reimbursements or the ad campaign. Some industry observers have said the reimbursements could range up to $80 million or more a year.
The ad campaign will be ongoing, and extend beyond the newspaper ads.
“We’re going to do everything we can to ensure consumers take advantage of [the reimbursement],” Krafcik said in a recent conference call. “We’re also reaching out to all of these owners with direct mail and email. We’re going to contact them through as many different channels as we can to ensure that they’re aware of the program.”
Both companies have created websites to provide details to affected customers as to how they can be reimbursed for additional fuel costs incurred to date, and in the future. Previous owners are also eligible to be reimbursed for the amount of time they owned the vehicle.
The automakers also are using Twitter and Facebook and have added an unspecified number of staff to handle customer service calls. Meetings via the Internet have been held with dealerships, where new decals have been added to vehicles to reflect the downward revisions on fuel-efficiency for affected models, which include Hyundai’s Elantra, Genesis, Tucson, and Veloster, as well as Kia’s Soul, Rio and Sorento, among others.
Hyundai’s ad agency of record is Huntington Beach-based Innocean Worldwide. Los Angeles-based David & Goliath handles Kia’s account. Executives at both agencies declined comment.
Krafcik said in the conference call that the discrepancy on fuel-efficiency ratings won’t likely mean basic changes in marketing and advertising, which have previously included fuel efficiency and various other aspects such as vehicle design, technology and safety.
