Hyundai sued for allegedly falsifying US electric car sales

Lawsuit filed by Napleton Aurora Imports says HMA pressured dealers to misuse inventory codes to exaggerate sales

A group of Hyundai Motor dealers has sued the South Korean automobile giant in Chicago federal court for allegedly inflating sales numbers for electric vehicles while punishing franchises that would not participate in the ruse.

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.

An attorney for the Napleton plaintiffs declined to comment on Monday.

The complaint in Chicago accused Hyundai of fraud and violating the Robinson-Patman Act, 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.

Prominent Hong Kong activist Joshua Wong entered a mitigation plea for a lighter sentence on Friday.

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.”

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.

Napleton reached a settlement with Chrysler in 2019 after it sued the automaker in 2016 for allegedly scheming to inflate sales figures. Chrysler denied the claims, and the settlement terms were confidential.

Chrysler in a related action agreed in 2019 to pay $40 million to the U.S. Securities and Exchange Commission to resolve claims it misled investors over allegedly inflated monthly sales figures.

The case is Napleton Aurora Imports Inc et al v. Hyundai Motor America Corp, U.S. District Court for the Northern District of Illinois, No. 1:24-cv-05668.