Hyundai, Kia to pay owners for faulty fuel-economy claims

Hyundai and Kia overstated the estimated fuel economy on more than 900,000 U.S. vehicles sold over the past two years and will compensate owners for the faulty claims, the companies said today.

The South Korean partners will also lower the fuel-economy estimates on most of their 2012 and 2013 models, the companies said in a joint statement. The move follows an investigation by the U.S. Environmental Protection Agency, which found discrepancies between its own test results and company figures.

The mileage on most Hyundai and Kia labels will be reduced by one to two miles per gallon, with the largest adjustment being a six mpg highway reduction for the Kia Soul.

"I sincerely apologize to all affected Hyundai and Kia customers, and I regret these errors occurred," W.C. Yang, chief technology officer of Hyundai/Kia research and development, said in the statement. "Following up on the EPA's audit results, we have taken immediate action to make the necessary rating changes and process corrections."

Hyundai Motor America CEO John Krafcik attributed the problem to "procedural errors" in the automaker's own testing, The Detroit News reported earlier today. He said Hyundai has identified the source of discrepancies between its testing method and the EPA's recommended approach.

"Given the importance of fuel efficiency to all of us, we're extremely sorry about these errors," Krafcik said in the statement. "When we say to Hyundai owners, 'We've got your back,' that's an assurance we don't take lightly. We're going to make this right for everyone, and we'll be more driven than ever to ensure our vehicles deliver outstanding fuel economy."

Michael Sprague, executive vice president for marketing at Kia Motors America, also apologized in an interview with the News.

EPA audit

Automakers follow EPA procedures when conducting their own mileage tests. The EPA enforces accuracy by auditing about 15 percent of vehicles annually. Staff engineers at the EPA's vehicle and fuel emission laboratory in Ann Arbor, Mich., included the Elantra in an annual fuel economy audit.

The EPA said its inquiry into the overstated mpg figures will continue. The agency would not comment when asked if the companies will be fined or if a criminal investigation is under way, the Associated Press reported.

Hyundai is retracting a claim that it leads the industry with four models that get 40 miles per gallon on the highway. The estimated highway mileages of most 2013 Accent, Veloster and Elantra models will fall to 37 or 38 mpg.

The combined average fuel economy for Hyundai and Kia models will fall to 26 mpg from 27 mpg for the 2012 model year, the companies said.

With the adjustments, neither company will market a model that achieves 40 mpg or more on the highway as previously advertised.

Dealer role

Hyundai and Kia said dealers will check odomoters to determine how much owners might have saved had they achieved the stated gas mileage.

The companies will then add 15 percent to that dollar total and send debit cards to owners for as long as they own their cars.

Current owners will be able to refresh their debit card for as long as they own the vehicle, Hyundai and Kia said. In addition, previous owners of affected vehicles who have already sold their cars will be reimbursed using the same formula.

Sprague told the News that an owner who drove 15,000 miles in Florida this year in a car with an overstated fuel economy of 1 mpg would get a refund of about $88.

New window stickers with the adjusted fuel-economy figures should be applied to unsold Hyundais and Kias within days, company officials said.

Hyundai and Kia are owned by the same parent company and share assembly plants, research, platforms and powertrains across many car and light-truck models.

However, they market and sell models through separate dealership channels.

Consumer complaints

The EPA received about a dozen complaints from consumers that the mileage on their 2012 Hyundai Elantra compact cars didn't match the numbers on the window stickers.

"Consumers rely on the window sticker to help make informed choices about the cars they buy," Gina McCarthy, assistant administrator of the EPA's air-quality office, said in a statement. "EPA's investigation will help protect consumers and ensure a level playing field among automakers."

The EPA's auditing of mileage claims by automakers rarely uncovers misrepresentations. It has happened only twice since 2000, the EPA says.

But this is the "first time where a large number of vehicles from the same manufacturer have deviated so significantly," the agency said.

In July, Santa Monica, Calif.-based Consumer Watchdog, a consumer group, sued Hyundai over fuel-economy claims.

The lawsuit seeks class-action status and to prevent Hyundai from using gas mileage numbers in advertising of the Elantra without government-mandated disclosures. The group is also seeking unspecified damages on behalf of California residents who bought or leased 2011 and 2012 Elantras.

Hyundai denied the claims at the time.

"Hyundai Motor America believes this case has no merit, as our advertising is accurate and in full compliance with applicable laws and regulations," the company said in a statement at the time.

Bloomberg and David Phillips contributed to this report