Feds fine Hyundai, Kia for false claims on fuel efficiency of vehicles

The Obama administration on Monday announced a $350 million settlement with Hyundai Motor America and Kia Motors America to settle charges that the automakers inflated their fuel economy ratings.

The settlement includes a $100 million fine, which Attorney General Eric Holder said is the largest under the Clean Air Act and should serve as a warning to automakers about overstating their vehicle performance to federal officials.

{mosads}The case stems from a 2012 Environmental Protection Agency (EPA) investigation that found Hyundai and Kia overestimated fuel economy and reductions of greenhouse gas emissions on 1.2 million vehicles. Hyundai and Kia are both owned by South Korea-based Hyundai Motor Co.

The agreement “will send an unmistakable message to automakers around the world that they must comply with U.S. law, that they must be forthcoming with the EPA about critical certification requirements and that the U.S. Department of Justice will never rest in our determination to protect American consumers,” Holder said Monday at a press conference.

Holder and EPA chief Gina McCarthy said that the companies misreported certain testing data for six vehicle models, centered on a testing component known as road load force.

While the vehicles did not violate federal standards for greenhouse gas emissions or fuel efficiency, Holder and McCarthy said the misstatements hurt consumers and competing automakers by giving Hyundai and Kia an undeserved leg up.

The extra greenhouse gas emissions will also hurt the environment, they said.

“When you misstate fuel efficiency on … these labels of a car, it means that we’re not delivering the health benefits and climate protections that are promised by the law,” McCarthy said.

“That tilts the market in favor of those that don’t play by the rules … and it disadvantages those that do play by the rules.”

McCarthy said the discrepancies amounted to 1 to 6 miles per gallon.

Apart from the $100 million penalty, Hyundai and Kia agreed to give up emissions credits worth more than $200 million and spend about $50 million to revamp its testing and oversight.

The companies have admitted breaking the law, but have maintained that it was unintentional and due to a misinterpretation of EPA rules. They say they used industry standard testing methods.

“We are pleased to put this behind us, and gratified that even with our adjusted fuel economy ratings, Hyundai continues to lead the automotive industry in fuel efficiency and environmental performance,” David Zuchowski, the parent company’s chief for United States operations, said in a statement.

Hyundai and Kia restated the vehicles’ statistics and have spent millions of dollars since 2012 reimbursing customers for the lower efficiency. They are also facing class action lawsuits from vehicle owners.

Justice Department and EPA officials said Hyundai and Kia are not the only car companies under investigation for allegedly violating greenhouse gas rules.

“We have caught other discrepancies,” McCarthy said. “Those discrepancies have not been systemic in nature, they have not resulted from the way in which the companies have done their testing systemically and they have not been anywhere near the egregiousness of the ones we’re here talking about today.”

Sam Hirsch, Justice’s acting head for environmental enforcement, said the action settles civil claims, but he declined to rule out criminal charges.