Kia and Hyundai To Reimburse Owners For Erroneous Mileage Claims

It’s back to the drawing board for Hyundai’s marketing team. They can no longer boast of a lineup proliferated by 40 MPG cars, because after today’s news, there are none of them remaining. It seems that Hyuundai What’s more, Hyundai and Kia now have to apologize for the error, replace all mileage numbers on unsold cars, and reimburse owners for the lackluster mileage.

With the launch of the 2001 Elantra, followed by the Accent, Veloster, and Sonata Hybrid, Hyundai had been boasting of a lineup that contained four cars that achieved 40 miles per gallon (highway) or above. That number is now zero.

Consumers have been claiming that Hyundai’s mileage claims for these cars have been overstated since shortly after the Elantra made its debut. While Hyundai claimed 40 miles per gallon on the highway, actual owners found that number very difficult to achieve. In fact, when I reviewed the 2011 Elantra, I devoted a paragraph to its fuel-economy shortcomings vs. what it’s supposed to do.

During a week with the Elantra in mixed driving, I observed combined fuel economy of about 26 MPG. I was excited by the potential of driving a car rated at 40 MPG on the highway, so played some games (namely, resetting the trip computer while on pure highway trips at 65 MPH) to see if it was indeed possible to hit the big four-oh on the highway, at true highway speeds. The outcome: at 65 MPH with the cruise control on, I saw about 32-34 MPG. Granted, that was on a rainy road, but I found it difficult to hit 40 without really babying it and keeping the car at or below 50 MPH. Your mileage may vary, but proving that I’m not crazy, the EPA’s user-submitted fuel-economy figures for the 2011 Elantra and its official 29/40/33 (city/highway/combined) economy rating is getting 31 MPG, with a small sample of eight drivers in eight states and a city/highway mix of 54/46.

It seems now that we’re not all crazy. Hyundai has conceded that there were “procedural errors” in the automaker’s own testing that led to the inflated numbers.

As you may know, the EPA does not test every new car’s fuel economy. Instead, it describes the test procedures very, very thoroughly, then automakers are expected to test their own vehicles. The EPA then tests a handful of samples itself to ensure that everyone’s playing fair.

Of about all of the vehicles sold by the Hyundai-Kia conglomerate from model years 2011 to 2013, about 35 percent (or 900,000 cars) are affected by the lowered ratings. Of the 900,000, 580,000 will fall by 1 mile per gallon, 240,000 will fall by 2 miles per gallon, and the remaining 80,000 will fall by 3-4 miles per gallon. The change will drop Hyundai-Kia’s fleetwide fuel efficiency from 27 miles per gallon to 26, though the company is still solidly in good standing from a CAFE standpoint because it’s not a full-line automaker (no light trucks).

Hyundai USA’s CEO, John Krafcik, said in a statement to the Detroit News, “Given the importance of fuel efficiency to all of us, we’re extremely sorry about these errors. We’re going to make this right.”

Since Hyundai and Kia share platforms, powertrains, research, and engineering across many models, so the same issue affected Kia. Kia’s executive vice president of sales and marketing, Michael Sprague, also issued an apology to the paper.

Though it’s somewhat dubious to blame a “procedural error” on such a big mistake – especially since testing done prior to 2010 was done correctly, then they changed the procedure to break it, and to the company’s benefit, no less, they are definitely doing the right thing going forward with reimbursements. They are basically paying for any extra gas that the original owner uses for the life of the car. Per the Detroit News:

For customers who bought vehicles with the faulty readings, Hyundai will reimburse them for the lower gas mileage.

Dealers will check cars’ odometers and calculate how much owners might have saved if the cars achieved the promised gas mileage. Hyundai and Kia will add 15 percent to the dollar total and send debit cards to owners. And they will continue to reimburse customers for as long as they own the vehicles.

An owner who drove 15,000 miles in Florida this year in a car that overstated its fuel economy by 1 mpg would get a refund of about $88, Sprague said.

That figure doesn’t include future payments, so at $100 or more per vehicle, the program could easily cost Hyundai tens of millions of dollars.

Vehicles sold with the revised ratings will not participate in the program, because their buyers are going into the transaction fully aware of the downward mileage revisions.

Hyundai clearly has egg on its face, but there are numerous examples of how doing the right thing for customers is an excellent way to win their loyalty and make lemonade from lemons. To me, they’re doing the right thing by reimbursing buyers for the extra gasoline they are using. People presumably bought these cars because they liked them and because of the promised fuel economy, so this solution makes buyers whole while allowing them to continue to enjoy their cars for many more years.

UPDATE: The joint press release from Hyundai and Kia has all of the details of the new fuel-economy ratings. Here’s thee link: http://www.hyundainews.com/media/articles/doc/37747_1_1.aspx