NEWS

Hyundai Faces Lawsuit Allegations Of Inflating EV Sales Numbers In U.S.

The Lawsuit Alleges Hyundai’s “Multitiered Scheme” To Falsify Sales Reports And Mislead Public On EV Demand; Hyundai Launches Internal Investigation

2 min read

By Michael Phoon • July 10, 2024

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Hyundai IONIQ 5 (Image: Hyundai)

Hyundai Motor America is facing serious accusations of pressuring dealers to artificially inflate electric vehicle (EV) sales figures based on a lawsuit by Napleton Aurora Imports and affiliated franchises.

Napleton Automotive Group’s Lawsuit

According to the lawsuit filed in federal court in Chicago, it alleges that Hyundai implemented a “multitiered scheme” to create false sales reports, potentially misleading the public about the actual demand for its EVs.

The lawsuit further claims that Hyundai established a “secret program,” where dealers were requested to falsely report unsold EVs as “sold” or placed into loaner service, only to reverse these transactions the following month. Dealers who participated in this alleged scheme were reportedly rewarded with allocations of high-demand vehicles and incentives, while those who refused faced competitive disadvantages.

According to the complaint, Hyundai sales executives offered dealers allocations of popular EV models and financial incentives in exchange for coding unsold EV inventory as part of their loaner fleet. This practice allegedly allowed Hyundai to report inflated sales figures to the press and investors, creating an illusion of strong EV performance.

Notably, the lawsuit cites transcripts of phone calls where Hyundai sales managers allegedly pressured dealership employees to participate in the scheme. For instance, a sales manager reportedly said, “We gotta hit a number for the press and for the Koreans.”

Hyundai’s Response

In response, Hyundai stated that it does not condone any intentional falsification of sales reporting data and has launched an immediate investigation. Michael Stewart, a Hyundai spokesperson, responded to the allegations stating, “We intend to take any and all corrective and remedial actions required based on that investigation.”

The timing of this lawsuit is particularly notable as Hyundai recently reported an increase in EV sales in the U.S. market. In June, the company claimed to have sold 4,669 EVs, a nearly 9% increase compared to the same month last year, with EV sales reportedly climbing 33% so far this year.

It should be noted that this is not the first time the Napleton Automotive Group has been involved in litigation over sales reporting practices. In 2016, Napleton sued Fiat Chrysler Automobiles (FCA) over similar allegations resulting in an undisclosed settlement in 2019. FCA subsequently paid a $40 million fine to the U.S. Securities and Exchange Commission following an investigation into fake sales reporting.

As of now, the current lawsuit against Hyundai seeks damages for lost sales and profits experienced by dealers who claim they were penalized for not participating in the alleged scheme.

As the case unfolds, it could have major implications for Hyundai’s reputation and its reported progress in the competitive EV market as well as having the automotive landscape closely observing the outcome of Hyundai’s internal investigation and the progression of this lawsuit.

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