EPA: Hyundai, Kia overstated gas mileage

DETROIT — Hyundai and Kia overstated the gas mileage on 900,000 vehicles in the past three years, a discovery that could result in sanctions from the U.S. government and millions of dollars in payments to car owners.

The inflated figures were uncovered by the Environmental Protection Agency in an audit of gas mileage tests by the two South Korean automakers. The agency, which monitors fuel economy, said that it's investigating how the companies came up with their numbers.

The EPA found inflated gas mileage on 13 models from the 2011 through 2013 model years, including Hyundai's Elantra and Tucson, and Kia's Sportage and Rio. The window sticker mileages were overstated on about one-third of the cars sold by the companies during the three years.

As a result, Hyundai and Kia will have to knock 1 or 2 miles per gallon off the vehicle stickers of most of their models. Some models will lose 3 or 4 miles per gallon. The Kia Soul, a funky-looking, boxy, small SUV, will lose 6 mpg from its highway figure, lowering it from 34 mpg to 28 mpg.

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

The agency would not comment when asked if the companies will be fined or if a criminal investigation is under way. Hyundai and Kia are owned by the same company and share factories and research, but they sell different vehicles and market them separately.

The reduced mileage figures are a black eye for the companies, which have seen explosive sales growth in the U.S. partly because of advertising campaigns that touted gas mileage. Hyundai even poked fun at competitors who promoted special high-mileage versions of their cars, claiming that its cars had high mileage across the model lineup.

The EPA said it's the first case in which erroneous test results were uncovered in such a large number of vehicles from the same manufacturer. Only two similar cases have been discovered since 2000, and those involved single models.

Company executives apologized for the discrepancies and promised to compensate customers because they're using more gasoline than expected. The executives said the higher mileage figures were unintentional, caused by errors in following EPA mileage test procedures. The customer payments likely are to cost Hyundai and Kia millions of dollars.

The EPA testing requirements are specific enough so the companies should have been able to come up with accurate results, said Naeim Henein, director of the Center for Automotive Research at Wayne State University in Detroit. "This might have been a mistake or intentional," he said. "Nobody knows until the investigation."

An examination of test results should show the EPA if the figures were raised intentionally or by errors, Henein said. Intentionally boosting mileage figures is a crime, he said.

Intentional or not, overstating the mileage could cut into Hyundai and Kia sales, especially with people who are deciding between brands and ready to buy soon, said Jesse Toprak, vice president of market intelligence for the TrueCar.com auto pricing website. But in the long run, the brands still offer good value for the money, even with lower mileage numbers, he said. "I don't think it's going to be necessarily a major hit. It's probably going to be a speed bump," Toprak said.

The EPA said it began looking at Hyundai and Kia when it received a dozen complaints from consumers that the mileage of their 2012 Elantra cars fell short of the window sticker numbers. The EPA included the Elantra in an annual fuel economy audit, and that led to the investigation.

Automakers do their own mileage tests, following procedures set by the EPA, and the agency enforces accuracy by auditing about 15 percent of vehicles annually.

Other automakers are closely watching the EPA's action against Hyundai and Kia, said Alan Baum, an auto industry consultant from suburban Detroit who deals with fuel economy regulations. "This will send kind of a warning to the automakers that if there's a consumer reaction to these fuel economy numbers, that the EPA will act," he said.

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