Hyundai Motor Co. (KRX:005380) and Kia Motors Corporation (KRX:000270) agreed to $395 million to consumers to settle the complaint that it overstated the fuel-economy estimates (MPG) of its vehicles sold in the United States.
In November last year, the U.S. Environmental Protection Agency (EPA) discovered that the sister car manufacturers incorrectly labeled the fuel-economy for several vehicle models (2011 to 2013) by as much as six miles per gallon.
Hyundai Motor Co. (KRX:005380) and Kia Motors Corporation (KRX:000270) acknowledged the error in overstating the figures of the fuel mileage of approximately 900,000 vehicles sold in the country. The car manufacturers explained that inflated fuel economy figures were caused by procedural errors and corrected the fuel economy labels for the vehicles involved. The mileage on most vehicle labels were adjusted by 1 to 2 MPG, and the largest reduction was 6 MPG for Kia Soul.
EPA received many complaints from consumers regarding the incorrect fuel-economy estimates provided by Hyundai Motor Co. (KRX:005380) and Kia Motors Corporation (KRX:000270), which prompted the agency to conduct an investigation against the affiliated car companies.
Hyundai Motor Co. (KRX:005380) said it would pay around $210 million while Kia Motors Corporation’s (KRX:00270) settlement with consumers would costs approximately $185 million. The amount of the settlement will change depending on the number of customers who would decide to receive a lump sum payment or a lifetime reimbursement program to cover the additional fuel costs when the car manufacturers changed the estimated MPG for the vehicles involved including Hyundai’s Accent, Azera, Elantra, Genesis, Santa Fe, Sonata, Tucson, and Veloster and Kia’s Rio, Sorento, Soul, Sportage, and Optima.
According to Kia, each of the customers who purchased one of its vehicle labelled with inflated fuel-economy estimates would receive an average lump sum payment of $667. On the other hand, Hyundai customers would receive an average lump sum payment of around $353.
Hyundai Motor Co. (KRX:005380) and Kia Motors Corporation (KRX:000270) expects a court approval for the proposed settlement. A class action lawsuit was also filed against the automakers in Canada.
