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HYUNDAI'S POWER CLAIMS INFLATED
Detroit Free Press (MI)Admitting it has overstated its engine horsepower ratings for a decade in North America, Hyundai Motor Co. will offer to extend or enhance warranties of roughly 400,000 owners. Officials of the South Korean automaker said it had discovered 28 cases in which its published horsepower figures, mostly in dealer catalogs, print advertisements and media kits, overstated engine performance by 1-12 horsepower. The average shortfall was 4.6 percent.
By LAWRENCE ULRICH FREE PRESS BUSINESS WRITER
Date: September 10, 2002; Page: 1C
Edition: METRO FINAL; Section: BIZ; BUSINESS
Illustration: Photo Hyundai
Memo: SEE AGATE LIST OF WARRANTIES ON VARIOUS MODELS IN MICROFILM PAGE 2C
In two cases, Hyundai slightly understated engine output. Horsepower was erroneously stated in about 1.3 million Hyundais sold since 1992, affecting various years of virtually every car and truck in the Hyundai lineup. The largest discrepancies include the 2001 and 2002 Santa Fe sport-utility, whose 2.4-liter engine produces 138 horsepower, 11 fewer than the 149 Hyundai claimed. Some models of the Sonata and XG300 sedans, and the Tiburon sports coupe were also revealed to have double-digit discrepancies. To soothe consumers, Hyundai officials said it will mail offers of warranty extensions to about 400,000 owners of models whose power shortage exceeds 4 percent. Owners of affected models from 2000-2003 can choose one of three options: * Doubling free roadside assistance coverage to a total of 10 years with unlimited mileage. * Extending bumper-to-bumper warranty coverage from 5 years or 60,000 miles to 6 years or 72,000 miles. * Extending powertrain coverage from 10 years or 100,000 miles to 12 years or 120,000 miles. Owners of affected 1999 and older models will receive an additional 5 years of free roadside assistance, which will begin when they accept the offer. Hyundai has relied on generous warranties to ease consumer concerns over its once-shoddy quality and dramatically boost U.S. sales. And Finnbar O'Neil, CEO of the Fountain Valley, Calif.-based Hyundai Motor America, said the company would move aggressively to reassure owners. "We're announcing these errors because we want our relations with customers, dealers and the public to be open and honest," he said. "I think it would be far more damaging to the brand name if we buried this data." O'Neil said Hyundai became aware of the mistakes a few months ago, when a Canadian governmental trade agency began questioning the claimed 140 horsepower for the Sonata sedan. An internal investigation revealed that preliminary estimates for horsepower had often been adopted in marketing materials but were never corrected when actual performance was measured in production models. In one case, an engineering change to improve emissions reduced an engine's output, but the change was never adopted in advertising. In the future, horsepower claims will be confirmed by top engineers before they are published, O'Neil promised. Other manufacturers have been burned by false horsepower claims. Most notoriously, Ford Motor Co. was forced to scrap an entire year's production of its SVT Mustang Cobra to recall and repair 1999 models that fell well short of the 320 horsepower Ford had advertised. O'Neil noted that, unlike owners of high-performance models, Hyundai owners put a low priority on pure horsepower. Art Spinella, vice president of CNW Marketing Research in Bandon, Ore., said his studies show less than 3 percent of Hyundai buyers consider engine power a key attribute. "Horsepower is not part of the Hyundai brand," he said. "If BMW did this, there'd be a whole different response." Hyundai is doing the right thing by going public, he said. "It's real smart. They're being up-front and providing solid compensation for owners. The impact on the brand will be minimal."
Caption: The 2002 Hyundai Santa Fe sport-utility's 2.4-liter engine produces 138 horsepower, not 149 the manufacturer claimed in its marketing.
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