Hyundai and Kia built their brands on the concept that their cars got better gas mileage than competitors, but the truth has now emerged.
After long promoting their alleged gas mileage in advertisements that often took swipes at rivals, the South Korean automakers acknowledged on Friday, Nov. 2, that they had exaggerated. As it turns out, the car makers had overstated the fuel economy of 900,000 vehicles sold in the U.S. in the last two years, i.e. roughly one-third of the vehicles they sold during that period.
Hyundai and Kia, both of which are owned by the Hyundai Motor Group, pledged to initiate a broad effort to reimburse consumers and restate mileage estimates for the affected models, this time with more accurate claims.
The confession came in the wake of an investigation by the Environmental Protection Agency (EPA) into consumer complaints that their cars were not achieving the official mileage estimates touted on the window stickers of new Hyundai and Kia cars. While a small number of drivers get the stickered mileage levels under real-world conditions, the government requires car makers to conduct standardized tests and calculate the figures, allowing prospective buyers to easily compare the fuel efficiency on various models.
Hyundai and Kia apologized for what they called "procedural errors" in testing, which allegedly resulted in inaccurate mileage stickers on some of their most popular models, such as the Hyundai Elantra and Kia Rio.
Hyundai and Kia are among the fastest-growing auto makers in the U.S., and are self-proclaimed leaders in the cut-throat area of fuel economy.
"Given the importance of fuel efficiency to all of us, we're extremely sorry about these errors," stated John Krafcik, Hyundai's CEO of American operations.
The EPA did not announce sanctions or fines against the car makers, but said both companies must re-label the window stickers on their cars and trucks to correct the error. According to the EPA, both Hyundai and Kia agreed to voluntarily lower fuel estimates on most of their cars and SUVs.
"Consumers rely on the window sticker to help make informed choices about the cars they buy," said EPA official Gina McCarthy. "E.P.A.'s investigation will help protect consumers and ensure a level playing field among automakers."
To appease customers who purchased cars with deceptive stickers, the car makers will offer debit cards to reimburse them for the difference between the claimed gas mileage and the actual amount of gas he vehicles used.
The companies also said their dealers would check vehicle odometers to determine how much more customers spent on gas compared to what they would have spent if the window stickers were accurate. Customers will then get that amount, plus a 15 percent "inconvenience" bonus.
Based on the performance of a typical car driven 15,000 miles this year with an overstated fuel economy of one mile per gallon, the average debit card will be for roughly $88. Owners of affected vehicles will be able to renew the card as long as they own the vehicle.
Krafcik refused to estimate the total cost of the reimbursement program, which could amount to tens of millions of dollars, but said the company is willing to spend as much as it takes to make things right.
As part of the effort, the companies will replace mileage stickers on a large number of unsold cars, and will also run newspaper ads explaining the errors and reaffirming their commitment to fuel economy.
According to the car makers, the false mileage figures were a result of internal errors in testing the vehicles for EPA certification. The government has standard procedures in place that all automakers must follow to produce mileage estimates. The tests measure aerodynamic drag on vehicles, how much energy it takes to overcome road resistance, as well as how much fuel is needed to drive the engine and wheels.
For Hyundai and Kia, errors in testing reportedly resulted in inaccurate mileage estimates that were one to six miles per gallon higher than the cars were actually capable of. The companies did not explain the wide band of error.
According to the EPA, this was the third time when it required car makers to re-label a vehicle's fuel economy since 2010. It was, however, the first time where multiple models from the same manufacturer had overstated mileage estimates.
