Hyundai and Kia overstated the fuel economy on more than one-third of the vehicles they sold in recent years, an embarrassing acknowledgment for two of the fastest-growing auto brands in the U.S.
The South Korean automakers issued an apology and said they would give special debit cards to nearly a million owners to make up for the difference in the lower miles per gallon logged by the vehicles. The discrepancies were found by the Environmental Protection Agency, which began investigating after consumers complained.
The companies — which are corporate siblings — blamed the overstated mileage ratings on "procedural errors" at a jointly operated test center in South Korea.
"Given the importance of fuel efficiency to all of us, we're extremely sorry about these errors," said John Krafcik, chief executive of Hyundai Motor America. "We're going to make this right for everyone."
The admission is the largest case ever in which an automaker inflated its fuel economy numbers, the EPA said.
Hyundai and Kia are known for aggressively advertising the fuel economy of their vehicles in the U.S. and have been the targets of consumer complaints about those claims. A lawsuit against Hyundai in Sacramento Superior Court that is seeking class-action status alleges that the automaker made false advertising claims for its popular Elantra compact sedan.
The automakers will issue personalized debit cards to owners of the vehicles. The cards will reimburse customers for the difference between the companies' mileage claims and what the EPA has determined is the correct fuel economy rating for combined city and highway driving.
The payment will be based on the fuel price in the region where owners live and on the miles they drive. That amounts to about $67 for a California owner of a 2012 Elantra that was driven 15,000 miles in the last 12 months, Hyundai said. The figure includes a 15% bonus the car companies are giving to make up for inconvenience caused by the false fuel economy claims.
Hyundai and Kia will replenish the cards to continue to make up for the cost of the fuel economy error as long as the owners have the cars. People who once had the vehicles but no longer own them will be reimbursed using the same formula.
The apology and the payments aren't mollifying all owners.
"My mileage ... is not even close to what they claimed," said Howard George, a Huntington Beach retiree, who said he otherwise likes his 2012 Elantra. "The debit card would be bupkis" — practically nothing.
Complaints by owners of the vehicles prompted the EPA to test the fuel economy of a 2012 Elantra earlier this year. The agency, which monitors the fuel economy tests by automakers, "observed discrepancies" between its results and what the automaker reported and launched an investigation into the sister brands.
The agency said the mileage ratings on the vehicle labels will be reduced by 1 to 2 miles per gallon for most of the vehicles. The largest adjustment will be 6 mpg for the automatic Kia Soul, which was listed at 34 mpg highway but now will have a 28 mpg highway rating. Both automakers will place new labels reflecting the corrected mileage estimates on cars currently at dealers.
Together, the two automakers overstated fuel economy ratings for about 900,000 vehicles, or 35% of the 2011-13 model year vehicles sold through Wednesday.
Automakers measure the fuel economy of their own vehicles according to a standardized test regime overseen by the EPA. They submit their results to the agency, which then approves the ratings for the window sticker that goes on new cars. The EPA also conducts its own tests for about 15% of the models annually.
The EPA's auditing of mileage claims by automakers rarely turns up misrepresentations. It has happened only two other times since 2000, once with a 2012 BMW 328i and once with a 2001 Dodge Ram pickup.
Jamie Court, president of Consumer Watchdog, which is a co-filer of the Sacramento lawsuit over Elantra advertising, said the automakers' admission of error is vindication. Hyundai has denied the allegations and asked the court to dismiss the lawsuit. A hearing is scheduled for Dec. 10.
"We are going to get to the bottom of whether the company rigged these tests, and if so, it owes people a lot of money," Court said.
Hyundai spokesman Jim Trainor said the automaker's overstatement of fuel economy was not intentional, adding that allegations that it rigged the results are "unfair and not true."
Court said that at the least, the EPA's discovery that the two automakers' mileage ratings were inflated should lead the EPA to do its own testing of every model sold in the U.S. and bill automakers for the expense.
"You can't rely on carmakers to test their own cars, even with the strict procedures the EPA has in place," he said. "The automaker has a vested interest in reaching a certain number as part of a marketing strategy. One or two digits on a window sticker can make a big difference in sales."
But even then, the ratings are best used as a comparison between vehicles rather than as a guarantee of specific fuel economy. The EPA, industry analysts and automakers all emphasize that individual driving habits and car maintenance patterns greatly influence gasoline consumption.
Times staff writer David Undercoffler contributed to this report.