General Motors Company (NYSE:GM) To Compensate Car Owners For Overstating Fuel Efficiency

General Motors Company (NYSE:GM)

Just days after halting the sale of 60,000 new 2016 SUVs, General Motors Company (NYSE:GM) is planning to compensate affected car owners. The cars in question have inflated fuel economy labels that make them overstate their fuel efficiency.

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Compensation Program

GM has attributed the overstated fuel economy ratings to improper calculations. The problem was first detected when the engineers started working in the 2017 model year labels.

According to people with knowledge on the matter, GM will compensate affected owners with cash, for the difference in miles per gallon. The program could be announced as early as next week and could target up to 130,000 people. GM Canada is also expected to run a similar compensation program.

The Detroit-based automaker has sold 170,000 of the 2016 SUVs in the US with 130,000 of the sales being on retail. The remaining cars are with car rental services as well as commercial and fleet buyers. There is no word on whether the proposed compensation program will target cars in rental services.

Fixing the cars and compensating affected owners will not be the only problem that the automaker will be dealing with. One of the affected car owners in Florida has already filed a class-action lawsuit against the automaker. The owner is suing the carmaker on behalf of other people who bought cars with overstated fuel economy ratings.

Regulatory Pressure

Regulators are also on GM’s case. The Environmental Protection Agency has already asked the automaker to furnish it with the necessary information about the same.

General Motors joins a string of other automakers that have found themselves in hot water with regulators in the recent past. Mitsubishi Motors is already struggling with a similar standoff having admitted overstating the fuel economy rating in four of its models. Two years ago, Hyundai Motors agreed to pay $350 million to settle claims that it overstated fuel economy ratings in 1.2 million cars.

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