Hyundai’s Krafcik: No Hangover From MPG Overstatement

NEW YORK – Hyundai has sidestepped any fallout from overstating its vehicle fuel-economy ratings, says John Krafcik, president and CEO of its U.S. unit.

A federal investigation into its testing procedure continues, he confirms, without offering an update on its progress.

“Our focus has been on delighting our customers,” Krafcik tells journalists at the New York International Auto Show.

Hyundai/Kia last year restated mileage ratings for 35% of its ’11-’13 models after the U.S. Environmental Protection Agency found flaws in the methodology the auto maker used to derive the fuel-economy estimates.

Consumer complaints led to the EPA inquiry.

Earlier this year, the Korean auto maker settled a number of lawsuits from owners alleging it knowingly overstated its mileage ratings, and since the scandal surfaced Hyundai has been awarding debit cards to other owners to make up the difference in their fuel costs.

Krafcik says Hyundai’s response has boosted customer confidence in the brand.

“The people coming in for the fuel-economy-reimbursement program are some of our happiest customers,” he says after introducing a redesigned for-’14 Equus large luxury sedan. “We’re doing a good job.”

Sales results bear evidence, Krafcik contends.

“All I can say is, if we had more production, we could sell more cars,” he says, pointing to record volumes posted in January and February and predicting all-time highs for the Elantra compact car and Sonata Hybrid midsize sedan in March. “Sales are strong.”

Hyundai deliveries last year grew 8.9% to 703,007 against an industry up 13.4%, WardsAuto data shows. So far this year, sales are ahead of like-2012’s pace by 2.3% in an industry up 8.3%.

However, Hyundai lost share last year, with its portion of the U.S. market dropping to 4.9% from 5.1%. It marked the first decline for the auto maker in 13 years.

Krafcik says share could erode fractionally again this year due to lack of inventory, even though expectations call for volume to rise about 4% to 734,000 vehicles.

“We will not be able to keep up (with) production,” he says.

No plans exist to move its luxury models into separate showrooms from its mainstream cars and trucks, Krafcik says, though Hyundai’s premium-car sales are accelerating and the potential exists for expanding the range from the current three offerings.

He notes 75% of Equus buyers are coming from other premium brands, mostly Lexus and Mercedes-Benz, and the auto maker’s customer-satisfaction numbers are among the industry’s best.

“It is not like we’re getting high marks because these people are coming in with low expectations,” he says. “We’re doing this with good, old clever thinking about what customers really want.”

Krafcik cites the free maintenance for Equus and Genesis owners, as well as the auto maker’s practice of picking up owners’ cars at their homes to perform service. Equus and Genesis buyers also can take delivery of their new car at home.

He likes the idea of adding another model to Hyundai’s premium range, perhaps a cross/utility vehicle, but says there is no plan to do so right now.

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