Kia and Hyundai pay compensation, shares fall

Nov 5, 2012

Shares in the car manufacturers have fallen 7% after they agreed to pay compensation for fuel efficieny exaggeration

Shares in Kia and Hyundai have fallen 7% after the vehicle manufacturers said they would compensate US customers for overstating the fuel efficiency of their cars, the BBC reports. The payout will cover 900,000 cars and run to millions of dollars. However, analysts fear the reputational damage to the two South Korean companies is the real problem. James Yoon, an analyst at BNP Paribas, said: "We believe this could be a game-changing event in Hyundai's success story. We now find improvements in brand perception at risk due to faulty mileage claims, which are at the core of the brand's success during difficult times. We think the potential financial loss is immaterial compared to the potential reputational loss of brand equity."

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