GM SUV owners offered debit cards for overstated mpg
General Motors Co. said Friday it is launching a compensation program for about 135,000 retail customers who could receive an average of $450 to $900 because the company overstated fuel economy by 1 to 2 miles per gallon on certain 2016 SUVs.
Customers who bought a 2016 Chevrolet Traverse, Buick Enclave or GMC Acadia with incorrect fuel economy window stickers will be able to select a debit card or a 48-month/60,000-mile protection plan. The plan is on top of the automaker’s bumper-to-bumper 36-month/36,000 warranty and includes additional features. The protection plan would begin after the factory warranty expires. Those leasing a vehicle will be offered the debit card, GM said.
The company is offering the payout to reimburse customers who may spend more on fuel than they expected.
The automaker said the average value of the debit cards will be $450 to $900, though what individuals receive will vary and could be as much as $1,500. The automaker will send customers letters with the offer via FedEx starting Wednesday and those who opt to participate could see debit cards arrive within a few weeks, GM spokesman Jim Cain said.
Just how much owners could expect to see varies because of differing factors, including whether it’s front-wheel or all-wheel drive and if the vehicle was purchased or leased, Cain said. Low mileage, two-year lease customers would get less than the $450 to $900 range, while longer-term lease customers and those who bought an SUV would see payouts at the upper end or higher than average range, Cain said. The protection plan offer is intended for customers who drive a lot of miles and plan to keep their vehicle for a long period of time, the carmaker said.
“We want all of our customers to have a great ownership experience, so we designed this reimbursement program to provide full and fair compensation in a simple, flexible and timely manner,” Cain said in a statement.
The Detroit automaker wouldn’t say what it expects the program to cost the company, but said it does not expect any material impact to its financial results. While the exact impact isn’t known, if every one of the eligible participants took a $450 payout, it could cost GM about $61 million – or $121.5 million at $900 a vehicle.
GM said its reimbursement is based on assumptions used in the Environmental Protection Agency’s formula for expected future fuel costs, which currently assumes $3-a-gallon gas and 15,000 miles of annual driving for five years.
Last week, GM issued a stop-sale of its entire inventory of the three SUVs on dealer lots — about 60,000 — after it discovered the window stickers were incorrect. New stickers with the corrected fuel economy figures were printed and have been delivered to dealers.
GM said it immediately informed the EPA of its mistake and the EPA has asked GM for information on the issue. On Friday, an EPA spokesman declined to comment on GM’s compensation plan; last week the agency said had asked GM to provide information about the issue to the agency.
The compensation program comes after the at least one class-action lawsuit has been filed over the issue. A Florida resident on behalf of SUV owners filed the lawsuit Tuesday in U.S. District Court in Detroit, alleging GM marketed and sold vehicles with false fuel-economy ratings, and that owners are entitled to compensation.
Other automakers have also reimbursed customers because of fuel economy overstatements including Ford Motor Co., Hyundai Motor Co. and Kia Motors Corp. In 2014, Ford lowered fuel economy figures on six vehicles and agreed to pay more than 200,000 owners between $125 to $1,050 for the extra cash owners will spend on gas because of lower-than-promised miles per gallon.
GM says its engineers discovered the error while working on labels for the new 2017 Acadia. The company said the mistake happened because new emissions-related hardware on the 2016 SUVs required GM to conduct new emissions tests and data from those test wasn’t included in calculations for the EPA fuel economy labels.
The correct fuel economy for the 2016 Traverse, Acadia and Enclave is: 18 mpg combined city/highway for front-wheel drive SUVs, or 15 mpg city and 22 mpg highway; all-wheel drive models have a combined city/highway rating of 17 mpg, and 15 mpg city and 22 mpg highway.
GM believes about 170,000 of the SUVs were sold with the misprinted window stickers when including vehicles sold to rental car companies and fleet customers. The carmaker will handle compensation to fleet customers individually, Cain said.