GM SUV compensation program will cost about $100 million: source

WASHINGTON (Reuters) - General Motors Co GM.N said on Friday it will give debit cards or extended warranties to 146,000 North American owners of new sport utility vehicles to compensate them because the automaker overstated the vehicles' fuel efficiency.

The GM logo is seen at the General Motors Lansing Grand River Assembly Plant in Lansing, Michigan October 26, 2015. Photo taken October 26. REUTERS/Rebecca Cook

The program covers about 135,000 U.S. owners and 11,000 in Canada, GM said.

GM said most of the debit cards would be worth $450 to $900 for U.S. owners of 2016 SUVs and $1,000-$1,300 Cdn for Canadian owners. The maximum any owner would get is $1,500.

The largest U.S. automaker said the program would not have a material impact on financial results. A source not authorized to discuss the issue told Reuters the program would cost GM around $100 million.

On Wednesday, Reuters and others reported GM was planning the program after the mileage error forced it to temporarily halt sales of about 60,000 new 2016 U.S. SUVs. GM resumed sales once the correct fuel labels arrived at dealerships.

“We want all of our customers to have a great ownership experience, so we designed this reimbursement program to provide full and fair compensation in a simple, flexible and timely manner,” GM spokesman Jim Cain said Friday.

GM this week blamed the 1-2 mile-per-gallon overstatement on improper calculations that did not include data from tests on new emissions-related hardware in the 2016 Chevrolet Traverse, GMC Acadia and Buick Enclave SUVs.

The U.S. Environmental Protection Agency has asked GM to provide testing data.

GM said buyers may choose a debit card or a 48-month/60,000-mile extended warranty plan designed for high-mileage customers and those who plan to keep vehicles for an extended period. Customers who leased vehicles will be offered a pre-paid debit card.

GM said it based reimbursement on the EPA formula used for window labels: “a fuel price of $3 per gallon and 15,000 miles of annual driving for five years.”

GM sold another 40,000 SUVs to rental car companies and commercial and government fleets. GM said it will work out compensation individually with government and commercial buyers.

On Tuesday, a Florida owner of a 2016 SUV filed a class-action suit against GM on behalf of owners who bought vehicles with overstated fuel economy ratings.

In April, Mitsubishi Motors Corp 7211.T admitted to overstating fuel economy of four models sold in Japan. In 2014, Korean carmakers Hyundai Motor Co 005380.KS and affiliate Kia Motors Corp agreed to pay $350 million in penalties to the U.S. government for overstating fuel economy ratings in about 1.2 million vehicles, and to compensate owners.

Reporting by David Shepardson; Editing by Richard Chang and David Gregorio