Hyundai MPG Debacle: Can You Trust the Fuel Economy Sticker? - Wall Street Journal (blog)

By Michael Ramsey

Hyundai Motor Group’s embarrassing and potentially costly admission today that it inflated the mileage claims for roughly a third of the 2.7 million Hyundai and Kia vehicles it sold in the U.S. during the past three years demonstrates how much consumers are relying on an honor system when they trust the city and highway fuel economy figures on the window sticker.

Hyundai, like other auto makers, tests its own cars and certifies to the federal Environmental Protection Agency that it correctly followed the detailed EPA procedures.

The company says it made mistakes when testing certain cars that resulted in the company claiming the cars could achieve 40 miles per gallon in highway driving.

The EPA doesn’t have the capability to test the hundreds of vehicles that are put on sale each year and relies on the auto makers to send the results of their own testing. The agency does test about 15% of the vehicles.

Rivals were openly skeptical of Hyundai’s mileage claims, and it appears some took their beef to the feds.

In a front-page feature  on Hyundai Motor Co. last year, former General Motors Co. Vice Chairman Bob Lutz was quoted as marveling at how the South Korean automaker could produce the Elantra sedan, then rated at 40 mpg, and offer it for so little money when it didn’t come equipped with some of the fuel-saving gadgets GM engineers thought were necessary to get to that figure in a car that size. 

Ford Motor Co. last year set up a test of a Ford Focus and an Elantra that were equipped with sophisticated fuel monitors. Journalists were challenged to achieve the fuel-economy advertised in each car’s window sticker. A Ford spokesman said on Friday it did not ask the EPA to retest Hyundai’s claims.

The EPA says it opened an investigation into Hyundai’s claims in response to complaints from other car makers, and consumers.

The damage to Hyundai could come in three forms. The first is financial. The Hyundai and Kia brands are offering to pay the difference to customers, which will please the people who already bought the vehicles. The differences were significant for some Hyundai and Kia models, reaching as much as 6 mpg on the Kia Soul Eco.

Hyundai and Kia’s brand reputations risk damage in the short-term, although car makers have recovered from setbacks such as this. Hyundai and Kia will have to  convince customers  they are serious about making amends.

Only two other vehicles, a 2001 Dodge Ram and 2012 BMW 328i, have had to change their label in the past 12 years. In those cases, the changes were very minor, equated to a 1 mpg on both. Honda Motor Co. has fielded complaints about the mileage claims of some of its cars.

The company said today in response to queries that the EPA has tested several of its models during the past year “and found Honda’s results to be well within guidelines.”

The third challenge is competitive.  Their cars won’t stack up as well when consumers shopping for fuel efficient models compare them to rival models.

The mileage rating for the 1.8-liter Hyundai Elantra automatic is dropping to 28/38 from 29/40. The Elantra’s new mileage rating puts it even with a similar Ford Focus, and one mile per gallon behind the highway rating of a similar Honda Civic. Hyundai executives used to boast about the superior mileage of their models. Now they can’t â€" at least until they re-engineer them to achieve 40 MPG the right way on the EPA highway test. 

Check out the comparison on fueleconomy.gov.