Hyundai Accused Of Faking EV Sales Data: Lawsuit

Good morning! It’s Tuesday, July 9, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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1st Gear: Hyundai’s EV Sales Numbers Could Be Fake

A group of Hyundai dealers is suing the South Korean automaker in Chicago federal court. They are alleging Hyundai intentionally inflated electric vehicle sales numbers and punished dealers who refused to participate in the deception. If this is true…damn. From Reuters:

The lawsuit filed on Friday by Napleton Aurora Imports in Illinois and affiliated franchises, said Hyundai Motor America Corp (HMA) pressured dealers to misuse inventory codes meant for “loaner” vehicles to exaggerate their sales figures.

Dealers that agreed to improperly code the vehicles were rewarded by Hyundai with wholesale and retail price discounts and other incentives, according to the lawsuit.

Hyundai said in a statement on Monday that it does not condone falsifying sales data and had opened an investigation after it was alerted to the allegations.

The company also said it has been pursuing litigation in South Florida to terminate two Napleton-affiliated franchises there tied to a criminal sexual battery allegation.

The complaint accused Hyundai of fraud and violating the Robinson-Patman Act. For those of you who don’t know (including me), it’s a federal antitrust law that bars sellers from discriminating on the basis of price:

Dealers that “played ball,” according to the lawsuit, would receive extra inventory of faster selling Hyundai models. The lawsuit said the scheme put desirable inventory in the hands of fewer dealers, depriving customers of choice, while helping Hyundai tout rosy sales figures to the public and investors.

It said Hyundai has emphasized its sales-volume growth for electric vehicles, leading the public to believe demand was market driven.

“Instead of organic growth fueled by desirable vehicles and consumer demand, HMA created a multitiered scheme to cause its dealers to report false sales,” the complaint said.

The lawsuit cited statements on a phone call from a Hyundai district sales manager who said “we gotta hit a number for the press and for the Koreans.”

Hey! That’s us! We’re “the press.”

The dealers said they have been denied benefits from Hyundai and asked the court to award an unspecified amount of damages to cover lost sales, revenue and profit.

This isn’t the first time Napleton Aurora Imports took on an automaker. Back in 2019, they reached a confidential settlement with Chrysler for allegedly scheming to inflate sales numbers. The automaker has since denied the claims.

Time will tell if what is alleged of Hyundai is true or not, but if it is, it’s going to rock a big chunk of the automotive world.

2nd Gear: Strong Competiton Means EVs Will Face Tough Second Half: Hyundai CEO

Let’s put away the Hyundai lawsuit for a moment and focus on their EV sales numbers at face value. The Korean automaker’s U.S. CEO Randy Parker says the EV market will heat up in the second half of the year, and it’ll be more competitive than ever. From Automotive News:

“We feel pretty bullish about the second half, but it’s going to be tough,” Randy Parker told Automotive News after the company reported U.S. sales results on July 2.

Parker said Hyundai, which offers three electric vehicles, has found its “sweet spot” in terms of where it wants to be with EV sales and that the automaker plans on “keeping its foot on the accelerator.”

Hyundai closed the first half in the U.S. up 1.2 percent compared with the year-ago period, with sales of 399,523 vehicles. Sales of Hyundai EVs accounted for 7.3 percent of its total sales in the first six months of the year, the company said.

Hyundai said its share of EV sales vs. the industry grew from 3.4 percent in January to 5.4 percent in the first half.

Parker said despite the narrative that consumers are disinterested in EVs, “the proof is always in the performance, and we perform quite well.”

Still, while EV sales are indeed growing, analysts predict that the surge that lifted the market from 1 percent to 8 percent in just three years will start to slow for the rest of 2024. However, sales are still expected to crack 10 percent by the end of the year.

But the industry is facing difficulties moving into the second half of the year.

“We’ve seen a lot of price cuts by our key competitors,” Parker said. “Tesla, Ford and Nissan have cut prices this year, and we still have to deal with the consumer fears: affordability, range anxiety and charging infrastructure.”

He said elevated interest rates, which have had a dramatic effect on monthly payments, could come down closer to the presidential election in November, but there’s no way to know for sure.

Don’t let anyone tell you EVs aren’t doing well in terms of sales. Sure, the growth rate may not be as high as it once was, but damn if they’re not still strong.

3rd Gear: Another Recall Hits The Fisker Ocean

The Fisker Ocean electric crossover is facing yet another recall. The functionally dead automaker is recalling 7,545 Oceans in The U.S., according to a letter from the National Highway Traffic Safety Administration. From Reuters:

“A communication failure with the cabin electric water pump can cause the high voltage battery management system (BMS) to enter limp mode, causing a loss of drive power,” the U.S. regulator said.

Fisker will replace the pumps free of charge to rectify the issue, the company said in the notice.

Fisker has already been forced to recall the Ocean over faulty door handles. It is also being investigated by NHTSA for “unintended vehicle movement.” It’s a real quality product.

4th Gear: Lucid Air Recalled For Power Loss Issue

Lucid, which, in comparison to Fisker is thriving, is recalling about 5,250 2022-2023 Air electric sedans because of a software issue that can cause a loss of power, according to a letter from the National Highway Traffic Safety Administration. From CNBC:

The regulator added the EV maker will also recall about 7,506 of its 2022-2024 Air luxury sedans due to an issue with a coolant heater that could fail to defrost the windshield.

Lucid had released an over-the-air software update in June as a fix for the software error and a separate update to identify a high voltage coolant heater failure and provide a warning to the drivers of the affected vehicles.

It’s not all bad news for Lucid, though. The Newark, California-based company reported strong-ish second-quarter deliveries that were above market expectations earlier this week. Sure, price cuts helped boost demand, but you gotta do what you gotta do.

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