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Auto Outlook: Hyundai, Kia Revise Mileage

UPI

Unleash the lawyers.

A class-action lawsuit was filed within 48 hours after South Korean automaker Hyundai Motor America and Kia Motors Corp. apologized for overstating the fuel economy of their vehicles.

Hyundai and Kia have admitted the estimated mileage of more than 900,000 cars, trucks and sport-utes sold in the United States and 120,000 sold in Canada since 2010 was exaggerated and said it would compensate current and former owners with debit cards for the additional amount they spent on gasoline.

The automakers apologized in full-page ads in The Washington Post.

"We sincerely apologize for these errors, and our top priority is to make things right for you," their statement said.

That's easier said than done, but that's what the Korean automakers say they will do.

"We think our reimbursement program provides the best, quickest, and most customer-focused remedy," Hyundai Motor America spokesman Chris Hosford told The Detroit News. "We are fully compensating affected Hyundai owners for the additional lifetime fuel costs associated with our rating adjustment -- plus a
15 percent premium."

Hyundai said owners of affected vehicles "have responded very favorably to the plan," which would give an average Florida motorist who drove 15,000 miles a year about $88.

However, the mea culpa and offer of compensation did not stop a Cincinnati law firm from filing a 14-page suit in U.S. District Court seeking more than $5 million in damages.

The News said the reimbursement program could cost Hyundai and Kia more than $100 million in addition to any civil penalties exacted by the U.S. Environmental Protection Agency.

Hyundai and Kia revised its corporate average fuel economy for its entire fleet of 2012 vehicles downward 1 mpg to 26 mph -- but the adjustment for some specific vehicles was as much as 6 mpg. The Kia Soul compact crossover, popularized by those commercials featuring hip-hop hamsters, saw its mileage reduced as much as 4 mpg, depending on the model.

The automakers also retracted claims that three of its 2013 models, including the hot-selling Hyundai Elantra, get 40 mpg. Hyundai sold more than 1 million Elantras through October.

Consumer Watchdog, a consumer group, filed a lawsuit in California in July, claiming Hyundai misstated and inflated gas mileage for 2011 and 2012 Elantras. The car's revised fuel economy rating is 2 mpg less, 38 mpg in highway driving.

Industry experts say the mileage flap likely will reduce the resale value of Hyundai and Kia vehicles in the near term.

Consumer Watchdog President Jamie Court said consumers may end up with "residual values that are less than they paid for a product that doesn't deliver what they want," USA Today reported. "They advertised 40 mpg even when they knew no one would get 40 mpg."

Investors sent Hyundai Motor shares down more than 7 percent Monday.

Hyundai and Kia blame the overstated mileage claims on "differences in interpreting" results of fuel efficiency testing in the United States and South Korea, The Chosum Ilbo, an English-language Korean newspaper, said.

The companies said the inflated mileage claims were caused by "procedural errors" and said they had "corrected the test process."

Sung Hwan Cho, head of Hyundai-Kia technical centers in the United States, told the Detroit Free Press the misstatement was more a result of the complexities of the testing process rather than results in the information on a new vehicle window sticker at the dealer.

One key component called "road load" measures the resistance of a vehicle's tires on the pavement, the vehicle's wind resistance and how the parts of the drivetrain, engine, transaxle or transmission, work together.

"There are hundreds of different parameters that can affect this road load," he said. "Ambient temperature, wind speeds, atmospheric pressure."

Cho said Hyundai engineers had added steps to the testing process in 2010 different from the recommended EPA process in to improve the efficiency of the test.

The EPA does not test the fuel economy of every vehicle sold. The National Vehicle and Fuel Emission Laboratory in Ann Arbor, Mich., routinely tests 150 to 200 vehicles a year to make sure the mileage and emissions match the data submitted by auto companies to the EPA.