South Korean automakers Hyundai Motor Co. (IW 1000/54) and Kia Motors Corp. (IW 1000/122) on Friday said they will reimburse car owners in the United States and Canada for exaggerating the fuel-efficiency claims of their vehicles.
The announcement came after the U.S. Environmental Protection Agency said it discovered inflated gasoline-economy numbers on a wide range of Hyundai and Kia models in an investigation sparked by consumer complaints.
The exaggerated numbers, which ran from one to six miles per gallon, helped push some of the models into the much-vaunted 40-miles-per-gallon club of gasoline-sipping vehicles.
Hyundai Motor America and Kia Motors America said the problem involved nearly 1.1 million 2011 through 2013 vehicles sold in North America: about 900,000 in the United States and 172,000 in Canada.
The two automakers blamed "procedural errors" at their joint testing operations in South Korea for the overstated fuel-economy claims.
"I sincerely apologize to all affected Hyundai and Kia customers, and I regret these errors occurred," said W.C. Yang, chief technology officer of Hyundai/Kia research and development, in a statement.
Hyundai, South Korea's largest automaker, has a 34% stake in Kia, and the companies share the same chairman, Mong-Koo Chung.
'Ugly Black Eyes' for the Automakers
After first testing a Hyundai Elantra and finding a discrepancy, the EPA expanded the tests to more models from both manufacturers.
The agency said it has come across the same problem only twice since 2000.
"This is the first time where a large number of vehicles from the same manufacturer have deviated so significantly," the EPA said.
Both companies pledged a reimbursement program for affected current and former vehicle owners to cover the additional fuel costs associated with the MPG revision.
Customers will get a personalized debit card that will reimburse them for their difference, based on the fuel price in their area and actual miles driven.
The automakers will add 15% onto the calculated reimbursement amount for the owners' inconvenience.
Cars currently on dealer lots will be re-labeled by the auto company with new window stickers reflecting the corrected mileage estimates. The mileage on vehicle labels will be reduced by one to six miles per gallon; the largest adjustment will be six miles per gallon on the highway for the Kia Soul.
"Consumers rely on the window sticker to help make informed choices about the cars they buy," said EPA official Gina McCarthy.
"The EPA's investigation will help protect consumers and ensure a level playing field among automakers."
Edmunds.com analyst John O'Dell predicted that the partnership, which forms the world's fifth-largest car-making group by sales, will be long dogged by the EPA revelations.
"Whether an honest mistake or a deliberate corporate effort to fudge the numbers, the fact [is] that the companies' ballyhooed 40 MPG cars are no longer members of that august club," he said.
Repaying customers who relied on the faulty mileage claims when purchasing their cars "will be something that haunts the companies for a long time to come," O'Dell added.
"In an industry where reputation is so important, this will undoubtedly give both carmakers ugly black eyes."
Copyright Agence France-Presse, 2012
By Veronica Smith