Nov. 2, 2012 at 2:01 PM ET
The two major Korean automakers operating in the U.S. have acknowledged overstating the fuel economy delivered by vehicles like the Hyundai Elantra and Kia Sorrento by as much as six miles per gallon.
Discovered during a routine audit by the Environmental Protection Agency, the makers will now face government sanctions that could add up to millions of dollars in fines. They have promised to refund money to buyers but also could face the same lawsuits other makers have been hit with after promoting inaccurate mileage or performance numbers.
“Consumers rely on the window sticker to help make informed choices about the cars they buy,” said Gina McCarthy, assistant administrator of the EPA’s air-quality office. “EPA’s investigation will help protect consumers and ensure a level playing field among automakers.”
The audit was triggered by a dozen complaints received by the agency which oversees federal fuel economy rules. The motorists said there was a large gap between the mileage ratings shown on their vehicles’ so-called Monroney stickers and what they actually yielded in real-world use.
That led the agency’s office in Ann Arbor, Mich., where mileage testing is done, to compare EPA’s results with the paperwork submitted by Hyundai and Kia.
A total of 900,000 sold in the U.S. could be affected, according to the EPA, which cited 13 different models. That includes seven different Hyundais: Elantra, Sonata Hybrid, Accent, Azera, Genesis, Tucson, Veloster and Santa Fe models. And six different Kias were impacted: Kia Sorrento, Rio, Soul, Sportage and Optima Hybrid.
The makers claim they changed their internal testing procedures in 2010, resulting in the problem. They contend that vehicles produced before then should not have to have their mileage restated.
Most of the models’ numbers were overstated by one to two miles per gallon, but the funky Kia Soul will have to adjust its claims by a full 6 mpg.
“We’re extremely sorry about these errors,” said Hyundai Motor America CEO John Krafcik, adding “We’re driven to make this right.”
Meanwhile, Michael Sprague, the marketing chief for Kia Motors America also apologized, noting that both makers will reimburse customers for the difference in fuel economy numbers.
The news comes as a major embarrassment for both manufacturers. With gas prices nudging record levels several times this year – and briefly exceeding records in California last month – mileage has become an industry battleground. Hyundai and Kia have been aggressively promoting their efforts to improve mileage, with many of their models leading their segments – until now, at least.
It is not unusual for vehicles to deliver mileage that varies from EPA testing. The government uses a test cycle that is designed to reflect real-world conditions but, on the road, such things as altitude, road conditions and driver behavior can have a big impact. The agency occasionally adjusts its tests, as it did a few years ago to make the results for hybrid vehicles more consistent with real-world results.
But it is rare for car makers to overstate mileage on their Monroney stickers. That has happened just twice since 2000, according to the EPA.
Hyundai and Kia executives say they plan to issue new window stickers within a few days.
They also plan to reimburse owners based on how much they are driving, calculating that against the cost of fuel and adding 15 percent to the total. A driver in Florida who clocks 15,000 miles a year, for example, could receive a debit card for $88. And Hyundai and Kia will continue to reimburse motorists for as long as they own the vehicles.
Considering the 900,000 vehicles impacted by the news, the initial payout could add up to tens of millions of dollars and reach into the hundreds of millions eventually.
The EPA has yet to disclose the fines Hyundai and Kia will pay. Another government agency, the Federal Trade Commission, could take action if it feels the Koreans intentionally overstated mileage claims in their advertising.
The impact to the makers’ reputation remains to be seen, but they could face additional legal challenges, as have several other makers who have acknowledged fudging numbers.
Mazda settled with consumers after it admitted the horsepower ratings of the RX-8 sports car fell short. And Honda settled a class action lawsuit over the mileage of early Civic Hybrid models. The maker fought and won a high-profile challenge in small claims court, however.
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