Hyundai-Kia fined for overstating gas mileage
Korean automakers Hyundai and Kia will pay the United States government a US$100 million civil penalty to end a two-year investigation into overstated gas mileage figures on window stickers on 1.2 million vehicles.
The penalty, announced Monday by the Justice Department and the Environmental Protection Agency, is the first under new rules aimed at limiting the amount of heat-trapping gases cars are allowed to emit.
Those regulations are a cornerstone of President Barack Obama’s plans to combat global warming and are achieved largely through improving vehicle fuel economy.
The payment could also serve as a precedent for other automakers who overstate mileage in violation of the Clean Air Act.
Attorney General Eric Holder said the settlement shows the need for car companies to be forthcoming about their compliance with emissions standards.
Under the settlement, Hyundai and Kia will forfeit greenhouse gas credits worth more than US$200 million because the 13 affected vehicles will emit about 4.75 million more tonnes of greenhouse gases than the automakers originally claimed.
The credits could have been sold to other automakers who aren’t meeting emissions standards.
Hyundai and Kia must also audit test results on current models, and set up an independent group to certify future test results, at a cost of around US$50 million.
Officials said the misrepresentations put other car companies at a competitive disadvantage, especially since fuel economy is the “number one factor that consumers think about when they’re going to buy a car”, said EPA Administrator Gina McCarthy.
The companies, which are both owned by Hyundai and generally sell different versions of the same models, denied allegations that they violated the law. Hyundai blamed the inflated mileage on honest misinterpretation of the EPA’s complex rules governing testing. Both companies said they are paying the penalties – US$56.8 million for Hyundai and US$43.2 million for Kia – to end the probe and potential litigation.
All automakers do their own mileage tests based on EPA guidelines, and the agency does audits to make sure they are accurate. In the past two years, the EPA has stepped up audits of automaker tests.
Just two weeks ago, the agency told BMW to cut mileage estimates on four of its Mini Cooper models. Ford and Mercedes-Benz also had to cut numbers on their window
stickers. EPA officials wouldn’t comment on whether the agency is investigating the other automakers.