General Motors Company (NYSE: GM) is giving payments of up to $100 million to new owners and lessees of 2016 Buick Enclave, GMC Acadia, and Chevrolet Traverse sport utility vehicles in order to compensate for the overstated mileage stickers. Bloomberg report states that the auto manufacturer overstated fuel economy by about 1 to 2 miles per gallon on the window stickers of the vehicles, as General Motors were not able to consider new emission hardware when computing for fuel efficiency.
The car maker will pay about 135,000 of its SUV owners by means of a prepaid debit card or a protection plan for 60,000 miles for 48 months. General Motors announced this move last Friday, which is expected to extend the owners’ current factory warranty. Meanwhile, clients who leased General Motors vehicles will be reimbursed via debit card. On May 25, the auto manufacturer will begin notifying its clients.
Affected clients who chose reimbursement through debit cards will receive around $450 to $900, while some customers are also anticipated to obtain up to $1,500, depending on the type of vehicle, the terms of lease, as well as th number of overstated mileage.
The Environment Protection Agency (EPA) knows of this situation. According to a spokesperson of EPA, “We have asked the company [GM] to provide all relevant information to the agency.”
General Motors is only giving compensation for clients who bought 2016 built models of the sports utility vehicles. GM engineers who are responsible for hardware process testing found out that actual fuel economy was 1 or 2 miles per gallon, lower than the previous year’s built models. However, the firm did not alter the mileage data in the window labels of the current year’s models. During the previous week, the auto manufacturer asked its dealers to stop selling these 2016 models due to the window sticker error.
Other car companies have also been accused of manipulating fuel econoy data. Just recently, Mitsubishi Motors Corp came clean about its fuel data fraud, wherein the automaker had been utilizing inappropriate data recording tools for the past 2 and a half decades. Suzuki Motor Corp has also committed mileage road test errors, prompting the government of Japan to conduct probes into the matter. Moreover, the General Motors European brand Opel had been alleged by German media of manipulating pollution controls, but the car manufacturer has denied this accusation.
General Motors had been fast in addressing the current issue by announcing the mentioned reimbursement plan to compensate customers for inflated fuel mileage. It is not yet known if regulatory bodies will decide to penalize the US car giant for overstating its fuel economy. Meanwhile, both Mitsubishi and Volkswagen are experiencing heavy penalties, as these car manufacturers decided to hide their inappropriate practices until these were discovered.
Last Friday, General Motors ended the session at $30.56, higher by 0.24 or 0.79 percent. Currently, the automaker’s market capitalization stands at 46.40 billion, and its dividend yield posts at 4.97 percent. GM stock has edged lower by almost 11 percent so far this 2016, lagging the S&P 500’s loss of 0.21 percent over the same period.