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Did MPG Overstatement Affect Hyundai And Kia Resale Values?

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2012 Kia Soul

2012 Kia Soul

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Owners of certain Hyundai and Kia models—and perhaps officials at those automakers—have cause to breathe a sigh of relief.

That's because after a scandal in which the two brands were found to have reported EPA fuel economy numbers that were up to 6 mpg higher than true test numbers, some of the vehicles that were most affected by the issue (or the have the most mileage-sensitive shoppers) appear to have suffered no blow whatsoever with respect to resale values.

“You would think that there would be an impact, but we didn't see that from the data,” said Eric Ibara, director of residual value consulting for Kelley Blue Book. On our request, Ibara looked at market values for the 2012 Kia Soul, which is the model that saw its highway mileage (with the automatic transmission) cut from 34 mpg all the way down to 28 mpg, and based on auction numbers, resale values were “virtually indistinguishable” before and after November 2012, when the EPA revealed the misstatement.

“When you look at what happened, you would have expected to see a drop in value beginning in November or December 2012,” said Ibara. “And that did not happen.”

Soul sales and value: seemingly unaffected by the issue

In fact, there was a a bit of the opposite—a slight increase in the Soul's auction values last January and February, reflecting a normal seasonal upswing. There's some evidence of the same this year—and values seem unchanged by the brands' decision announced in December to offer a lump-sum payment alternative.

So was there a resale value adjustment for vehicles that shoppers choose more often based on fuel economy, like the Elantra or Accent? Not significantly, if at all. According to KBB's market numbers, the Elantra, which had its EPA numbers adjusted by 1 mpg for the 2012 model year and 2 mpg for 2013, actually rose in value versus its anticipated depreciation—both after November 2012 and again after December 2013.

“It's really hard to say from our data that these announcements hurt their used-car values in any way,” summed Ibara. “It went pretty much unnoticed by dealers that are bidding on those cars at auction,” said Ibara.

“Common sense would say that the value of the vehicle should be lower, as the vehicle performed to a lower standard than advertised,” said Ibara, who explained that this market indifference underscores a point: that both brands are appealing to owners in ways that go far beyond mileage numbers alone—with styling and feature content, for example. If this had affected a hybrid, or a model that sold primarily on the basis of mileage, the outcome might have been different.

Even though the Soul was downgraded by 6 mpg, fuel economy probably wasn't one of the first several reasons for opting for the Soul; and that's what we're seeing.

More careful about mileage claims from now on?

Hyundai Elantra 40 mpg

Hyundai Elantra 40 mpg

It's likely that manufacturers are now somewhat more conservative about their mileage claims—or about making premature claims—in light of the audit results, which sent shockwaves through an industry that had been increasingly marketing models around fuel economy numbers. Complaints from owners, who involved several consumer organizations, led to EPA fuel economy audits, which found that 13 Hyundai and Kia models failed to achieve the advertised fuel efficiency—such as the 40-mpg highway figure that Hyundai pushed in marketing for the Elantra—when run through the proper tests and test conditions.

 
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