Last year, Hyundai, along with Kia, which it partly owns, admitted it had overstated fuel-efficiency ratings on some new cars and promised to compensate buyers. This week, the carmakers revealed just how much the error will cost. They have set aside nearly half a billion dollars (US$225 million for Hyundai and US$187 million for Kia).
The hit comes at an already tough time for the South Korean companies. While they’ve been enjoying rising sales in North America, one key advantage—favourable exchange rates—is deteriorating fast as the won rises against the dollar and the yen in Japan, home to chief rival Toyota. Last week, Hyundai reported that its quarterly profit fell a surprising 5.5 per cent. Over the past four years, Hyundai was the world’s fastest growing automaker. Now, facing what company chairman Chung Mong Koo calls “a very difficult year,” that streak seems certain to come to an abrupt halt.