Overstating MPGs May Cost Hyundai & Kia $395 Million in Proposed Settlement

Hyundai Motor America and Kia Motors America have agreed to pay as much as $395 million to settle class action lawsuits filed after the Korean automakers overstated fuel economy ratings on about 900,000 vehicles sold in the U.S. Hyundai’s share will be as much as $210 million while Kia will have to pay up to $185 million, according to statements issued by the companies and reports by Automotive News. The settlements must still undergo court review, expected early next year.

The lawsuits were filed after the companies disclosed in November of 2012 that approximately 600,000 Hyundais and 300,000 Kias from the 2011, 2012 and 2013 model years were sold with EPA fuel economy ratings that weren’t accurate. The U.S. EPA relies on testing results provided by car companies. At the time of the announcement, Hyundai and Kia officials apologized blaming flawed internal testing procedures for the overstatements. Eight models were affected and most consumers say the combined MPG ratings of their cars fall by one or two miles per gallon.

Over 50 lawsuits have been consolidated into a single case being handled in federal court in Los Angeles and the dollar figures work out to an average lump sum payment of ~$353 to the affected Hyundai owners and ~$667 to each affected Kia consumer.

John Yoon, attorney for Kia Motors America, said in a statement: “Kia Motors is a responsible company, and the proposed settlement enhances our goal of making things right for our customers by providing new reimbursement options. Kia Motors is fully committed to taking care of its customers, and today’s settlement adds flexibility by adding lump-sum payment options to the transparent reimbursement program introduced last year.”

The actual amounts paid out will depend on how many owners choose to receive lump sum payments. The owners also have the option of continuing to participate in the existing reimbursement program Hyundai and Kia started back when their vehicles’ fuel economy ratings were restated. Current and past owners participating in the reimbursement program receive debit cards to compensate them for the extra gasoline that they’ve had to buy.

“Customers responded favorably to the original reimbursement program,” W. Gerald Flannery, general counsel for Hyundai Motor America, said in a statement. “Today’s settlement is designed to provide them with an option, again intended to make customers fully whole for Hyundai’s fuel economy ratings restatement.”