GM to pay $100 mn over SUV mistake

Chevrolet Traverse is one of the SUVs that overstated its fuel economy figures reuter

General Motors will spend about $100 million to reimburse customers who bought 2016 Chevrolet Traverse, GMC Acadia and Buick Enclave sport utility vehicles with overstated fuel economy figures, said a person familiar with the matter.

Fuel economy was overstated by one to two miles per gallon because the company failed to reflect new emissions-related hardware in calculations of efficiency for window stickers, according to a statement. The 135,000 owners of the SUVs will receive a debit card or a 48-month, 60,000-mile protection plan, GM said in an e-mail. The company notified dealers today and will start sending letters to vehicle owners on May 25.

The auto industry's credibility has been strained following Volkswagen's September admission that it rigged diesel-engine software to pass emissions tests, prompting Germany to set up a commission to dig further. Mitsubishi Motors has since acknowledged that it manipulated fuel-economy tests. Suzuki Motor said it improperly applied the Japanese tests, though not enough to affect the ratings. And GM's Opel was accused by German media and an environmental advocacy group of manipulating pollution controls, which the brand has denied.

GM last Friday told dealers to stop selling the models because it had found the window-sticker errors, which it described as "inadvertent". Sales have since resumed, GM said.

Most lessees and buyers taking the cards will get $450 to $900 in value and some will get as much as $1,500, depending on lease terms and the amount of mileage overstated.

"GM is out in front of the issue with a fairly generous plan for a small inaccuracy in reported fuel economy," said Erik Gordon, professor at the Ross School of Business at the University of Michigan. "It is a striking contrast to how some car makers are handling their mistakes."

GM shares rose 0.7 per cent to $30.53 at 3:23 pm New York time. The stock fell 11 per cent this year through Thursday while the Standard & Poor's 500 Index slipped 0.2 per cent.

The U.S. Environmental Protection Agency said GM has apprised it of the situation.

"We have asked the company to provide all relevant information to the agency," said Nick Conger, an EPA spokesman.