South Korean automakers Hyundai Motor America and Kia Motors America overstated the fuel economy on nearly a million late model vehicles and will issue owners special debit cards to reimburse the extra money they are paying for fuel.
The error was announced Friday by the U.S. Environmental Protection Agency, which monitors the fuel economy tests by automakers.
The mileage on most vehicle labels will be reduced by 1 to 2 miles per gallon, and the largest adjustment will be 6 mpg highway for the Kia Soul, federal regulators said. Both automakers will place new labels reflecting the corrected mileage estimates on cars currently at dealers.
"Consumers rely on the window sticker to help make informed choices about the cars they buy," said Gina McCarthy, assistant administrator for EPA's Office of Air and Radiation. "EPA's investigation will help protect consumers and ensure a level playing field among automakers."
The Korean automakers, which are siblings, and share automotive components and testing, said they had overstated fuel economy ratings for about 900,000 vehicles, or 35% of the 2011-13 model year vehicles sold through Wednesday.
They blamed "procedural errors" at joint testing operations in Korea for the problem.
"I sincerely apologize to all affected Hyundai and Kia customers, and I regret these errors occurred," said Dr. W. C. Yang, chief technology officer of Hyundai/Kia research and development.
The automakers will issue personalized debit cards to owners of the vehicles. The cards will reimburse the customers for the shortfall in the companies' mileage claims and what the EPA has found is the correct number for combined city and highway driving fuel economy rating.
Here is owner information for Hyundai and for Kia.
The payment will be based on the fuel price in their region where they live and on the miles they have driven. The cards will include a 15% bonus to make up for inconvenience caused by the incorrect fuel economy claims.
Hyundai and Kia will refresh the cards to continue to make up for the cost of the fuel economy error for as long as the owners of the vehicles have the cars. People who have once had the vehicles but no longer own them will be reimbursed using the same formula.
The EPA decided to audit the fuel economy claims made after receiving consumer complaints about Hyundai mileage estimates.
As the agency started to look into the issue, its staff "observed discrepancies" between its results for a 2012 Hyundai Elantra and what the automaker reported. That caused the EPA to expand its investigation by reviewing the data for other Hyundai and Kia vehicles.
The EPA's auditing of mileage claims by automakers almost never turns up misrepresentations. It has happened only twice since 2000, but this is the "first time where a large number of vehicles from the same manufacturer have deviated so significantly," the agency said.
It's not clear how the action by the automakers will affect a lawsuit filed against Hyundai over fuel economy clams by Santa Monica-based Consumer Watchdog, a consumer group, in July.
The lawsuit seeks class-action status and wants to stop Hyundai from using gas mileage numbers in its advertising of the Elantra without government-mandated disclosures. It asks for unspecified damages on behalf of California residents who bought or leased 2011 and 2012 Elantras.
Hyundai denied the claims, issuing a statement saying, "Hyundai Motor America believes this case has no merit, as our advertising is accurate and in full compliance with applicable laws and regulations."
But on Friday, the company was reversing course.
"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, and we'll be more driven than ever to ensure our vehicles deliver outstanding fuel economy."