Hyundai, Kia fine: It's more than just $100 million
Automakers Hyundai and Kia underestimated the mileage for more than 1 million of its vehicles, landing their parent company a $100 million fine. But the Hyundai Motor Group will also have to give up greenhouse gas credits valued at more than $200 million.
Automakers Hyundai and Kia underestimated the mileage for more than 1 million of its vehicles, landing their parent company a $100 million fine. But the Hyundai Motor Group will also have to give up greenhouse gas credits valued at more than $200 million.
The $100 million fine to the US Environmental Protection Agency (EPA) is only a small part of the penalty that Hyundai Motor Group must pay because it subsidiaries, Hyundai and Kia, underestimated the mileage for more than 1 million of its vehicles.
The two carmakers also聽agreed to a voluntary consent decree聽to surrender 4.75 million greenhouse gas credits valued at more than $200 million because they understated the mileage 鈥� and by extension the emissions 鈥� of six models of their cars in 2013 and 2014. These credits are earned by automakers who produce vehicles that emit less greenhouse gas than required under US law.
The discrepancies in fuel economy ranged between one and six miles per gallon, according to the EPA. 聽The Justice Department and the EPA said the $100 million fine and the other damages that Hyundai and Kia must pay is the largest penalty ever exacted under the country鈥檚 Clean Air Act, and EPA Administrator Gina McCarthy said the punishment, though severe, was warranted. (Related:聽Despite Strong Gains, Electric Vehicles Still Far From Mainstream)
鈥淏usinesses that play by the rules shouldn鈥檛 have to compete with those breaking the law,鈥� McCarthy said Nov. 3 at a news conference with Attorney General Eric Holder to announce the outcome of their negotiations with Hyundai Motor Group. 鈥淭his settlement upholds the integrity of the nation鈥檚 fuel economy and greenhouse-gas programs.鈥�
Overall, the false mileage claims may end up costing the Hyundai-Kia subsidiaries聽more than $700 million. Last year they agreed to pay almost $400 million because of these errors in a class action suit that is expected to yield an average of about $350 to each customer who bought such a vehicle.
The settlement is based on the EPA鈥檚 finding that both automakers based their mileage and pollution estimates on the best test results for each vehicle, not on the averages from several tests. As a result, both the EPA and the state of California filed a complaint accusing Hyundai and Kia of profiting from misleading mileage claims. (Related:聽Are Hydrogen Fuel Cell Vehicles Dead On Arrival?)
In 2012, the two carmakers admitted overstating the fuel economy of vehicles they sold in the United States, citing 鈥減rocedural errors鈥� in their testing. On Nov. 3, after the consent decree was announced, they stood by this explanation, saying inaccurate mileage statements weren鈥檛 intentional. Nevertheless, Hyundai and Kia agreed to improve the mileage tests for their vehicles.
Hyunday Motor Group鈥檚 two subsidiaries aren鈥檛 the only聽car manufacturers being scrutinized聽by the EPA and the Justice Department. The Ford Motor Co. is one of several that have acknowledged exaggerating mileage in the past two years. But officials in Washington would not comment on whether any of these companies might face penalties.
鈥淭his [Yhundia-Kia violation] is by far the most egregious case,鈥� McCarthy said by way of explanation. 鈥淲e have caught other discrepancies, but those have not been systemic.鈥�
By Andy Tully of Oilprice.com
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