Hyundai-Kia to pay US $100M for overstating mpg

[Omaha Steve]

Source: AP-Excite

By TOM KRISHER and ERIC TUCKER

WASHINGTON (AP) — Korean automakers Hyundai and Kia will pay the U.S. government a $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 it underscores the need for car companies to be honest about their compliance with emissions standards.

Under the settlement, Hyundai-Kia will forfeit greenhouse gas credits worth more than $200 million because the affected vehicles will emit about 4.75 million more metric tons of greenhouse gases than the automakers originally claimed. The credits could have been sold to other automakers who aren't meeting emissions standards.

FULL story at link.



FILE - This April 20, 2011 file photo shows the Hyundai Accent, foreground, and Elantra on display at the New York International Auto Show, in New York. Korean automakers Hyundai and Kia will pay the U.S. government a $100 million civil penalty to end a two-year investigation into overstated gas mileage figures on window stickers of 13 models, the Justice Department and Environmental Protection Agency announced Monday, Nov. 3, 2014. (AP Photo/Mary Altaffer, File)

Read more: http://apnews.excite.com/article/20141103/us--hyundai-kia-overstated_mileage-7a268cdb7e.html

[Lodestar]

1. What to do if you own an affected Hyundai or Kia >>>

A good article to help you troubleshoot about what to do if you're an owner of one of these cars:


In November 2012, an EPA investigation and consumer watchdog complaints led Hyundai and Kia to restate gas mileage on more than two dozen 2011, 2012 and 2013 models. The affiliated Korean automakers conceded interpretation errors on EPA procedures and launched a program to compensate some 900,000 owners with reloadable debit cards that factored in the difference in mileage with the cost of gas, plus 15 percent extra apology cash. The debit cards require periodic odometer checks at dealerships, however — a different path than Ford took when it restated gas mileage on the C-Max. The Michigan automaker reimbursed current C-Max lessees and owners $325 and $550, respectively.

What to Do If You Own an Affected Hyundai, Kia

Now, as the result of a recently settled class-action lawsuit, owners of affected Hyundai and Kia models can get their own lump-sum payout. Hyundai and Kia have agreed to offer lump-sum reimbursements that average $353 per affected Hyundai and $667 per affected Kia. That leaves owners with a few options, according to the automaker:

Decline the lump-sum payout and continue to receive periodic payouts on the debit-card program for as long as you own the car.
Accept the payout, which comes minus anything you've already received in the debit-card program.
Accept a dealership credit of 1.5 times the lump sum.
Accept a credit of two times the lump sum toward the purchase of a new Hyundai or Kia.

It's unclear what the dealership credit goes toward. Specifics per model also remain unclear — representatives at both brands didn't return our messages — but Hyundai said a 2012 Elantra owner would receive $320.

What payout makes more sense? We ran the numbers. If you drove 12,000 annual miles and gas averaged $3.50 a gallon, the difference in fuel between the 2012 Elantra's original EPA rating (33 mpg combined) versus the restated rating (32 mpg) amounts to about $40 per year. The debit-card program would reimburse you that plus an extra 15 percent, or about $46 per year. The program extends as long as you own the vehicle (it isn't transferrable), so it would take about seven years in this scenario to break even with the lump-sum payout. That's a year longer than the average new-vehicle owner keeps his car. Throw in the fact that cash today is worth more than the same amount paid over time — you could invest it and make a return — and it makes little sense not to take the payout, particularly if leased your Hyundai.

Unless, of course, you drive a ton. Take a driver who puts 25,000 annual miles on that 2012 Elantra. Given the same gas price, Hyundai's debit-card program would dispense around $76 per year, which makes the break-even point just 3.4 years.

Kia's per-vehicle average ($667) is much higher, presumably because popular cars like the Soul saw combined mileage fall by a larger margin. The 2012 and 2013 Soul saw combined EPA mileage drop 10 to 14 percent, depending on the version.

MORE http://blogs.cars.com/kickingtires/2013/12/hyundai-kia-settles-mileage-lawsuit-owners-get-lump-sum-option.html


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I'm glad to hear this. I figured it would eventually happen. While I don't have any major complaints about my Hyundai other than the horrific lies over mileage, I do want to be compensated. I bought the car BECAUSE of the advertised mileage and its green image. Now I'll have to consider the options. This lawsuit may explain why Hyundai has been aggressively trying to get me to trade in my car over the past few months for a newer model.

[snooper2]

5. What to Do If You Own an Affected Hyundai, Kia - sell the junk LOL

[Lodestar]

2. Losing the trust of customers can have long term consequences for a brand.

Being lied to by car companies - all the way from the top to your local dealership sales and repair - is certainly nothing new. Automobile companies have about as much respect as lawyers... ZERO..zip It is a culture of thieves... always putting profit first and seemingly having no moral compass or social conscience. It is the dark underbelly of capitalism. Hey "it's 'just' business". Hyundai had been cheered as a rags to riches story, a 'poor quality car company' which turned itself around. The company received a lot of congratulatory slaps on the back from the American public and came about on the heels of the new free trade agreements made with Korea (2007). The small fuel efficient cars which somehow managed to also incorporate many bells and whistles previously inconceivable for this price range was Korea's best ambassador of goodwill.

Forbes:

---But Hyundai and Kia’s troubles may be far from over. This episode could sour U.S. consumers against the brands more significantly and for a longer time than is immediately apparent. Apologies and gas cards may not cut it.

One reason is that the mislabeling of the cars’ mileage didn’t happen by accident. Someone at the companies strained to deliver fuel-economy ratings that penetrated the 40-mpg ceiling that has become the benchmark for a “high-mileage” vehicle today, because the mileage figures now being shaved by corrected testing procedures just happen to have dropped each of the models slightly below 40 mpg.

//

It isn’t as if Hyundai heard consumers’ first complaints about its 40-mpg claims, ruthlessly investigated them and came forward with a mea culpa, a fix — and then the gas cards.

No, Hyundai had to be shamed into the admission by a grass-roots campaign of skepticism about the mileage claims and then suffer the ignominy of a finding of wrongdoing by an EPA audit. In an era when increasing transparency makes it incumbent on all brands to keep their noses cleaner than ever, Hyundai ended up having to be handed an ugly handkerchief.

This is only the second time since 2000 that EPA has required a manufacturer to re-label a vehicle’s fuel economy and, to date, involves the largest number of models from the same automaker that had to be corrected.

And there’s one more thing. In a sense, Hyundai may have been uniquely able to create a sense of — for lack of a better term — betrayal among American auto consumers.

That is because Hyundai scored so big three years ago by showing Americans that it identified with their financial pain during the depths of the Great Recession. At that time, Hyundai announced its “Assurance” incentive program with great fanfare during the Super Bowl telecast in 2009, promising that the brand would take back a newly purchased Hyundai if the buyer subsequently lost his or her job.

MORE
http://www.forbes.com/sites/dalebuss/2012/11/05/mileage-falsification-may-hurt-u-s-mojo-of-hyundai-and-kia/


FTA
http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta

[Hassin Bin Sober]

9. "Losing the trust of customers"

Apparently the car buying public has a short memory.

I was in the car finance business when Kia came to the US. We were one of the first dealerships to get a Kia franchise. I had a hard time getting lenders to loan on the cars because the banks were just getting over the great Hyundai debacle of the early '90s that nearly sunk several lenders - Loan money on a $6000 dollar new car? What could possibly go wrong? Well those new cars were pieces of shit and when they broke down after the warranty period the owners stopped paying for them. The banks were getting back pieces of shit worth $50 dollars that still had a balance of $4 or $5000 dollars. Hyundai sent a lot of borrowers to the bankruptcy courts when the lenders started garnishing wages. The owners had to go out and buy another car to get to work so they couldn't pay for two cars.

Along comes Kia. Another car from South Korea. A lot of banks said no thanks.

We pissed off a lot of good customers selling those shit Kias to our customers. We were a Buick dealer so our customers were used to a quality product. Customers would buy a Kia for their grand kid or kid thinking "$9000 dollars for a new car? What could possibly go wrong?" Bzzzzt. The salesman would joke (under their breath) when the car left the lot - "see you in two days!" (As in the car would be back on the hook).

So Hyundai buys Kia. Puts a big 100,000 mile warranty on the car. Better I guess. Except I know of a few people that were denied warranty claims when their engines blew. I guess if you don't change the timing belt at 60,000 miles your warranty is void. $5000 for a new engine on a car worth $3000??? Maybe.

From what I've heard, the belt is no longer an issue.

What's next?

[exboyfil]

3. Here I was thinking fraud is an illegal activity

Anyone going to prison?

[groundloop]

4. Apparently it's just a cost of doing business

[joanbarnes]

6. Laughable scapegoating. Our two Kia Optimas get BETTER than advertised mileage.

[snooper2]

7. laughable brand loyalty LOL, did you read the article?

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 — $56.8 million for Hyundai and $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.


In November 2012, the EPA ordered Hyundai and Kia to redo the window stickers on cars that made up about one-third of their model lineup. Generally, gas mileage was overstated by one or two miles per gallon. But the EPA's tests found the highway mileage of one vehicle, the boxy Kia Soul, was 6 mpg too high. Both automakers started a program to reimburse automakers for the difference between their mileage tests and the EPA's lower numbers.

[whatthehey]

8. I just got a $775 check from Ford for the same thing

Funnily enough both it and the Hyundai Sonata it replaced got better than the posted mpg. I'll gladly take the money thanks to folks who can't drive properly and then blame their cars for it though.