South Korean automotive giant Hyundai Motors America Corp (HMA) is fielding a lawsuit from a group of Hyundai dealers in the United States that accuse the company of inflating its electric vehicles sales figures. Filed in Chicago federal court by Illinois-based Napleton Aurora and its affiliates, the suit alleges that Hyundai Motors has retaliated against dealerships that refused to inflate their EV sales figures as well.
According to Napleton Aurora Imports and the other franchises that filed the suit, Hyundai Motor pressured vehicle dealers in the U.S. to inflate their sales numbers by misusing inventory codes used for “loaner” cars. The dealerships that agreed to take part in the deception received incentives such as retail and wholesale price discounts from Hyundai, the lawsuit notes, while those that declined were subject to retaliatory practices.
A statement released by Hyundai said the automaker was wholeheartedly against falsifying sales data and that it launched an investigation once it heard the allegations of fudging sales data to paint a rosier picture of its performance in the EV segment. Hyundai added that it is already seeking litigation to cease its relationship with two South Florida-based, Napleton-affiliated franchises because of their ties with criminal sexual-battery allegations.
The Chicago federal court lawsuit alleges that Hyundai has engaged in fraud and is in violation of the Robinson-Patman Act. This is a federal antitrust law that prevents sellers from perpetuating price-based discrimination. Hyundai allegedly rewarded dealerships that agreed to misuse inventory codes and fudge sales numbers with additional inventory of faster-selling models.
This scheme, the suit alleges, put faster-moving and more desirable Hyundai models in the hands of a limited number of dealerships, limiting the number of choices available to consumers and helping the automaker provide doctored sales numbers to the public. With electric vehicle demand slowing down amid rising living costs, high interest rates and premium EV prices, this scheme could have made it seem Hyundai was doing something right and funnel more customers to the Asian automotive giant.
The lawsuit alleges that Hyundai used the scheme to make the public think the demand for electric vehicles was driven by the market. Rather than relying on organic growth thanks to consumer demand and high-quality vehicles, the complaint says Hyundai used this “multitiered scheme” to inflate its sales numbers. The dealers behind the suit say Hyundai denied them benefits for refusing to take part in the scheme and asked the Chicago federal court to award them an unspecified amount in damages to cover their lost sales, profit and revenue.
Most EV makers, such as Mullen Automotive Inc. (NASDAQ: MULN), are focused on using innovation and standard marketing practices to gain an edge over their competitors. It is unfortunate that Hyundai is attracting such negative press as a result of accusations that it is using underhand methods to attract buyers to its EV models.
NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN
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