Hyundai, Kia Resale Values to Weather Storm of Fuel Economy Blunder: Experts

Last week Hyundai and Kia made an embarrassing confession; they’ve been overstating the fuel efficiency of their vehicles for the past three years. This miscalculation includes most of the models in both of their lineups. To make things right the South Korean automakers are readjusting the numbers and reimbursing customers. That should help rebuild trust but there could be more fallout from the blunder. Has the resale value of their vehicles been affected?

“If there is an impact it’s likely to be on the smaller side, like 1 percent, but it’s entirely possible it will have no impact at all,” said Eric Ibara, Director of Residual Value Consulting at Kelly Blue Book, one of the world’s largest vehicle valuation companies.

New cars are almost always more fuel efficient than their predecessors and Ibara said “we haven’t really seen the old-generation vehicles take an unusually harsh dip, but it may be masked by the strong used-car market.”

Of all mainstream brands Hyundai ranked third in ALG’s 2012 Residual Value Awards. Top honors went to Subaru while Honda came in second. Aside from the company’s podium finish the Elantra took home honors for best compact car.

“Generally speaking our resale values are on the rise” said Miles Johnson, Senior Manager, Midwest Product Public Relations for Hyundai. He also said “every time we’ve launched an all-new model we’ve seen a bump.”

Jim Hall, Managing Director of 2953 Analytics concurs with Kelly Blue Book’s findings. He said “I don’t think it will affect their resale value.” As for the efficiency numbers he said, “these damn things are estimates,” noting there’s plenty of variability in what people get in real-world driving.

Jonathan Banks, Senior Director at NADA Used Car Guide calls the fuel-economy fiasco “a big chink in the armor.” He said a lot of customers are new to Hyundai and Kia and have “no long-term attachment to the brands like a Toyota or a Honda buyer.” He also said people tend to forgive automakers if they have long-standing positive perceptions of them.

Banks also noted Hyundai and Kia just earned a positive perception in the marketplace and that it’s very easy to squander this goodwill. “Perception, when you lose it it’s hard to get back” he mentioned.

Still, in a vote of confidence Banks said “we don’t think it will have an impact on resale values immediately.” He also said that unless NADA starts to see a lot of negative press or bad consumer response “we won’t make any adjustments to our forecast.”

“It appears they’re doing the right thing – their response is critical,” Banks said, calling their reaction to the situation quick and honest, adding “it should show some good will.” He also said “I’m pretty positive they’ll do an effective job,” and “they seem to have a good understanding of their situation.”

Ibara said “they appear to really want to keep their customers satisfied.” He also mentioned “people gravitate to these vehicles for a number of reasons” including ride, handling and styling, not exclusively fuel economy. If the window stickers are off by a little bit it shouldn’t be a deal-breaker for most customers.