Beijing Hyundai, the joint venture between South Korea's biggest
carmaker and Beijing Automotive Industry Corp, was yesterday sued
by 68 buyers of its Accent cars for alleged price fraud.
The owners, from 20 provinces, municipalities and autonomous
regions, jointly filed a lawsuit against the joint venture at
Beijing's Shunyi District People's Court.
They claimed that Beijing Hyundai cheated them when it slashed
the prices of the Accent in July. This came just four months after
the car's launch when the carmaker pledged it would not cut its
prices for at least two-and-a-half years, claimed the plaintiff's
attorney, Ding Runqiang.
Beijing Hyundai launched three versions of the 1.4-litre Accent
on March 16 retailing at 79,800 yuan (US$9,980), 87,800 yuan
(US$10,980) and 102,800 yuan (US$12,850). At the time, in an
interview with popular Chinese Internet portal Sohu.com, company
President Noh Jae-man said the prices of the Accent would not
change "for at least two-and-a-half years."
However, on July 7, the company cut the prices of the two most
expensive versions of the Accent by 8,000 yuan (US$1,000).
"These customers bought these cars just because of the company's
price promise," Ding, from Beijing Jiayou Law Firm, told China
Daily. "Therefore, they were cheated by Beijing Hyundai and
suffered losses."?
The plaintiffs are demanding a public apology and 8,000 yuan
(US$1,000) apiece in compensation from Beijing Hyundai.
Jin You, a Beijing-based organizer of the Accent owners' case,
told China Daily: "We would not have bought the Accent had
Beijing Hyundai not made this promise." However, Beijing Hyundai
denies the accusation of fraud. The court will decide within the
week whether or not to accept the lawsuit.
"We will sue it (Beijing Hyundai) at the Beijing No.2
Intermediate People's Court if the court in Shunyi does not accept
our lawsuit or we lose the case," Jin said.
Analysts said Beijing Hyundai had to cut the prices of the
Accent due to intense competition.
Hua Xue, chief executive officer of cheshi.com.cn, a
Beijing-based website conducting on-line car sales nationwide said:
"The launch prices of the Accent were higher than customers'
expectations. It couldn't help but slash the prices in order to
deal with competition from rivals despite having made this
promise."
The Accent competes in a segment of the market where customers are
very sensitive about prices going head-to-head with models such as
Volkswagen's Polo, the Chevrolet Lova and the Honda Fit.
Hua added that Beijing Hyundai also had to cut the prices in an
effort to achieve its ambitious 2006 sales target. The company had
announced at the beginning of this year that it aimed to sell
300,000 vehicles in 2006 which is 70,000 units more than last
year.?
In the first seven months of 2006, Beijing Hyundai's sales grew
19 percent year-on-year to 157,100 units, ranking fifth in China's
passenger vehicle market. It sold 13,400 Accents by the end of
July, a figure that fell far short of Beijing Hyundai's
expectations, according to analysts.
The company, which has facilities in Shunyi District, also
produces the Elantra compact sedan, the Sonata NF mid-sized sedan
and Tucson sport utility vehicles.
Jia Xinguang, from the China Association of Automobile
Manufacturers said: "The lawsuit will tarnish Beijing Hyundai's
reputation. It's likely to have a negative impact on its sales for
at least one year. This is a major lesson other automakers should
learn."?
Established in 2002, Beijing Hyundai, plans to double its
production capacity with the construction of a new factory capable
of turning out 300,000 vehicles a year. It intends to boost annual
sales to more than 600,000 vehicles by 2010.
(China Daily August 9, 2006)