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Hyundai - Kia to Pay $300 Million in Penalties for Overstating MPG Figures

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On: Wed, Nov 5, 2014 at 3:28PM | By: Teddy Field

Hyundai - Kia to Pay $300 Million in Penalties for Overstating MPG Figures

Last year, Hyundai/Kia was caught inflating their fuel economy ratings. Their un-official numbers caused many customers to expect more from a gallon of gas than their Korean eco-box could deliver. And now Uncle Sam wants his pound of flesh, and it’s gonna hurt…

Contrary to popular belief, those ‘official’ EPA fuel economy numbers are usually generated by in-house testing, performed by the automakers themselves. The Environmental Protection Agency ‘spot checks’ roughly only 15% of all new cars sold each year, so those big numbers on a car’s Monroney sticker rely more on the honor system than actual government-backed scientific fact.

When the 40-mpg Hyundai Elantra came under scrutiny—due to customer complaints about not being able to achieve the expected mileage—the EPA decided to audit Hyundai/Kia fuel economy ratings. They discovered both companies’ MPG ratings to be grossly overstated, going all the way back to 2011. Customers have since been reimbursed for the additional fuel costs of their vehicles, but the government has just weighed in with their bill. And it’s big.

For misleading customers, Hyundai has to pay $56.8 million in fines and surrender 2.7 million greenhouse gas emission credits
Kia has to pay $43.2 million in fines and surrender 2.05 million greenhouse gas emission credits.

A further $100 million in civil penalties will be required, and the California Air Resources Board will receive $6,343,400 of that amount.

Those greenhouse credits are valued at $200 million, and a further $50 million will be required to prevent future violations. Hyundai/Kia has said they’ll appoint an ‘independent certification test group’ to avoid future problems, and they’re auditing the MPG ratings of 2015-2016 models to ensure accuracy.

The final total in fines and penalties: $350 million.

Add to that an estimated $400 million spent in a class-action lawsuit regarding the mileage claims, and the cost of this fiasco for parent company Hyundai is around $750 million (that's ¥28,688,750,000 which sounds even scarier).

US Attorney General Eric Holder issued a statement regarding the settlement. In it he said, "This unprecedented resolution with Hyundai and Kia underscores the Justice Department's firm commitment to safeguarding American consumers, ensuring fairness in every marketplace, protecting the environment, and relentlessly pursuing companies that make misrepresentations and violate the law."

This may be the only instance of useful government regulation that we’ll ever see.

11/5 arm


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