For the past few years, Hyundai has touted itself as selling more vehicles that achieve 40 mpg on the highway than any other automaker. Today, U.S. federal regulators announced that Hyundai and Kia Motors had inflated the fuel economy ratings on 900,000 vehicles sold since 2010. The automakers will compensate owners for their extra burned fuel — and kill their incorrect ads as well.
The errors — covering 39% of the vehicles sold by the two companies since 2010 — are the largest ever uncovered by the U.S. Environmental Protection Agency since the federal government first set fuel economy standards in 1975. The agency says the errors were unearthed after EPA officials couldn't replicate the mileages Hyundai and Kia had claimed on window stickers, which the companies will have to replace on new models sitting on dealers' lots.
"We're just extremely sorry about these errors," John Krafcik, Hyundai's CEO of American operations, told The Associated Press. "We're driven to make this right."
While the two companies are owned by the same family-controlled South Korean conglomerate and share engineering, they treat each other as competitors in the United States. However, Korean overseers have been known for setting aggressive sales targets for both companies and firing top U.S. executives when results didn't meet expectations. And Hyundai's fuel economy ratings have played a key role in its marketing for years, with the automaker buying Super Bowl ads to tout itself as the most fuel-efficient carbuilder in the country and claiming it sold more vehicles with 40 mpg highway efficiency ratings than all other large automakers combined.
Under the corrections announced today, Hyundai now has no models that top 40 mpg.
Hyundai and Kia say the errors were due to a flaw resulting from changes to its fuel economy tests starting in the 2010 model year that overstated efficiency on 13 models, including popular sellers such as the Hyundai Sonata and Accent. While the errors were often one to two miles per gallon high, in some vehicles they were far more; the 2011 Kia Soul 2-liter automatic's rating of 26 mpg city and 34 mpg highway has been corrected to 23 mpg city and 28 mpg highway.
The affected models include the 2011 Hyundai Elantra, Hyundai Sonata Hybrid and Kia Optima Hybrid; the 2012 and 2013 Hyundai Accent, Azera, Elantra, Genesis, Sonata Hybrid, Tucson and Veloster; the 2012 and 2013 Kia Rio, Sorento, Soul and Sportage; and the 2013 Hyundai Santa Fe.
While the Environmental Protection Agency sets the testing procedures that automakers must use to measure fuel economy, it relies on the companies to self-report accurate claims. The EPA began investigating the mileage on Hyundai models after scores of complaints from customers that their cars weren't meeting the window sticker mileage estimates. In July, Hyundai was sued in California by consumer groups accusing the automaker of misleading customers by stating only the 40 mpg highway ratings in its ads.
Hyundai and Kia say they will offer affected customers a rebate in the form of a refillable debit card with the value based on how many miles the owner has driven and the average price of a gallon of gas in their area, along with a 15 percent premium. While that would amount to less than $100 for many customers today, Hyundai and Kia say they will add to the debit cards as the owners keep driving; the companies also vowed to compensate previous owners of the affected models who had sold their cars.
But that will not be the end of trouble for the automakers. The EPA says it will continue to investigate how the inaccurate estimates became so widespread; Hyundai and Kia could face penalties from that agency or probes from other federal regulators. And it's inevitable that customers will sue; after the Toyota stuck pedal recalls, it faced claims from owners who cited losses from the reduced resale value of their vehicles.