Hyundai Dealers File Lawsuit Alleging Inflated Electric Vehicle Sales and Retaliation
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In a striking legal development, a group of Hyundai dealers has filed a lawsuit in the Chicago federal court, accusing Hyundai Motor America Inc. (HMA), the U.S. subsidiary of the South Korean auto giant, of inflating its electric vehicle sales figures. The plaintiffs contend that the company punished franchisees who refused to participate in the scheme.
The Allegations
The lawsuit, initiated by Napleton Aurora Imports Inc. of Illinois along with its affiliated franchisees, was filed last Friday. According to the legal documents, HMA coerced dealers into inflating sales numbers by misusing inventory codes meant for "loan" vehicles. The dealers who complied and falsified sales data supposedly received incentives from Hyundai. These perks allegedly included discounts on both wholesale and retail prices, giving the compliant dealers a financial edge.
Hyundai sharply denied these allegations in a statement released on Monday. “Hyundai does not tolerate falsification of sales data and has initiated an investigation following these reports,” the company stated.
Broader Implications
The complaint extends beyond mere financial dishonesty. It accuses Hyundai of deceptive business practices and alleges violations of the Robinson-Patman Act, a federal antitrust law prohibiting price discrimination among dealers. The lawsuit paints a picture of a calculated scheme wherein "cooperating" dealers were rewarded with extra inventory of fast-selling vehicles. This preferential treatment purportedly deprived other dealers and customers of choices and allowed Hyundai to present inflated sales figures to the public and investors.
"Instead of organic growth driven by attractive vehicles and consumer demand, HMA created a multi-layered scheme to induce its dealers to falsely report sales," the lawsuit asserts. It further includes a quote from a Hyundai regional sales manager, who allegedly said, "We have to achieve our goals for the media and the Korean people."
Connected Allegations
In a related and equally serious development, Hyundai has initiated a lawsuit in South Florida seeking to suspend operations at two Napleton-affiliated franchisees due to allegations of sexual assault. Attorneys for the Napleton plaintiffs have declined to comment on the matter.
Legal Precedents
This is not Napleton’s first foray into legal battles over inflated sales figures. The dealer group previously sued Chrysler in 2016 over similar accusations. Chrysler settled the case in 2019 but denied any wrongdoing. Interestingly, Chrysler also paid $40 million to the Securities and Exchange Commission in 2019 to settle another related lawsuit concerning inflated monthly sales figures.
Seeking Damages
The dealers involved in the Hyundai lawsuit argue they have suffered financial harm due to the alleged scheme. They are asking the court to award unspecified damages to compensate for lost sales, revenue, and profits.
Case Details
The case, registered as Napleton Aurora Imports Inc et al. v. Hyundai Motor America Corp, is being heard in the U.S. District Court for the Northern District of Illinois, under case number 1:24-cv-05668.
As the case unfolds, the automotive industry and investors alike will be closely watching the developments. The outcome could have significant implications for dealer-manufacturer relationships and the transparency of automotive sales reporting.
Stay tuned for more updates as this story progresses.
