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Hyundai-Kia’s $100m fuel bill

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    "This might have been a mistake or intentional ... Nobody knows until the investigation."

Car maker to issue fuel cards to US customers after advertising false economy ratings, but no problem in Australia

The world’s fourth-biggest car maker, the Hyundai-Kia group, will issue fuel cards to more than 1 million customers after being busted by North American authorities for providing false fuel economy ratings for more than one-third of the cars it has sold there in the past year.

But the companies say Australian customers are not affected because the testing procedures are different. In statements issued jointly by the companies over the weekend, Hyundai-Kia executives admitted the company made an error in the consumption figures it supplied North America's Environmental Protection Agency, which in turn are used in advertising and on rating labels displayed in showrooms.

The difference across the models affected was between 1 and 6 mpg – on average a 3 per cent error compared with the car’s correct figure. As part of its rectification process, Hyundai-Kia must issue new rating labels to the affected cars – and it will provide existing owners a debit card to pick up the difference in petrol costs, plus a 15 per cent bonus for the inconvenience.

By Hyundai-Kia’s calculations, based on current US fuel prices and the average distance travelled annually, most customers would receive $88 a year to cover the cost difference. Given that the error affects 900,000 cars in North America and 172,000 in Canada, that equates to an estimated bill of $94.3 million – plus $13.9 million in the 15 per cent inconvenience charge – for a total annual bill of $108 million.

However, this is a conservative estimate. Hyundai-Kia says it will pay people based on their actual mileage – owners who driver further will get reimbursed accordingly – for the entire time they own the vehicle. The fuel card deal will not, however, be passed-on to people who buy the cars second-hand because the fuel rating data will have been updated by then. Hyundai-Kia said the calculating error occurred during the testing process.

The Reuters news agency reported that Hyundai and Kia procedural errors at the companies' joint testing operations in Korea led to the incorrect fuel economy ratings. The EPA said regulators found discrepancies between agency results and data submitted by the car makers. All car makers typically conduct their own fuel economy testing and then supply the data to government authorities in the various jurisdictions around the world.

Prior to this revelation, a number of customers had taken class action against Hyundai-Kia in North America because they couldn’t get close to the claimed fuel economy rating. Kia and Hyundai have seen huge sales growth in the US partly due to advertising material that touted excellent fuel economy, with four vehicles hitting the 40mpg (5.8L/100km). 

Hyundai even took a swipe at rivals with special economy-focused versions of its cars. When asked about the Hyundai-Kia fuel economy issue in North America, Naeim Henein, director of the Centre for Automotive Research at Wayne State University in Detroit told the AP news agency: 

"This might have been a mistake or intentional ... Nobody knows until the investigation." In a telephone question and answer session with journalists, Dr. Sung Hwan Cho, Hyundai-Kia’s technical representative, said: “In order to achieve … test efficiency, we (added a) few more steps and (processes), which is different from what EPA has generally recommended, so that’s where … procedure errors happened."

He said the EPA testing process was “rigid, but there is also some points where we need some interpretation”. The fuel economy testing procedures in North America and Australia are different -- but the figures supplied to the Australian government come from the same Hyundai-Kia technical centre in Korea that made the US errors.

Kia and Hyundai answered the following questions from News Limited:

1) How does Hyundai/Kia know it got the EU/ADR [Australian Design Rule] testing right?

Kia: All vehicles that are common with Europe are tested under the protocol and procedure for the United Nations Economic Commission for Europe Regulation No 101 (ECE R101.00). For this testing a representative of the certifying body is required to be present at the time of testing and data collection in what is known as a “witness test”.

ECE R101.00 is harmonised with Australian Design Rule 81/2 (ADR 81/02). Any vehicles which are sold in Australia but not available in Europe are tested under the same set of criteria and data collection procedures but without the requirement of a witness from the certifying body being present. While the Australian Government does not require a witness to attend ADR specific testing Kia Motors believes that common test protocols applied for ECE and ADR testing ensures accurate data collection.

Hyundai: The Australian Government’s Australian Design Rule (ADR) 81/02 is aligned with UN ECE (United Nations Economic Commission for Europe) Regulation 101, where the process of testing is carried out according to strict guidelines. UN ECE Regulation 101 is recognised by many governments around the world (not including USA and Canada) as a benchmark for light vehicle fuel economy.

The test facilities used are certified to ISO 9001 standard and recognised by Australia’s Department of Infrastructure and Transport and by UN ECE Technical Services. All vehicles sold both in Australia and Europe are witnessed by a representative of the certifying body – this is known as a ‘witness test’. Vehicles sold in Australia that are not sold in Europe are tested using the same protocols, but the Australian Government does not require a witness for ADR tests. The common procedures used for UN ECE and ADR testing ensures accurate data collection.

2) Why should Australian customers not be worried?

Kia: The testing protocols for ECE and ADR certification are completely different than those applied to the US Environmental Protection Agency Federal Test Procedure 75 (EPA75). There is no witness requirement in the EPA procedure.

Hyundai: See answer 1.

3) Would Hyundai/Kia issue fuel cards if a [fuel economy error] was found, now the international precedent has been set?

Kia: It is not something that has been considered as there is no basis to believe it is necessary.

Hyundai: We don’t think there is any reason to consider it – there is no basis to believe it will be necessary.

4) What exactly is the procedure Hyundai/Kia uses to submit its fuel economy ratings in Australia?

Kia and Hyundai: See answer 1.

5) Have Australian authorities ever retested or validated Hyundai/Kia data on any aspect of the vehicle, including fuel consumption numbers?

Kia: To the best of our knowledge they have not exercised their right of audit.

Hyundai: No request from the Department of Infrastructure and Transport on the validity of the results has been submitted to date.

6) Will Hyundai/Kia resubmit fuel [economy] numbers to satisfy Australian authorities, as a goodwill gesture?

Kia: If the certifying body makes a request to audit or retest any vehicles Kia Motors Australia will comply.

Hyundai: HMCA will cooperate with The Australian Department of Infrastructure and Transport if there is a request for data verification.

7) Exactly how did the [North America] error occur? Was it in real-world or in test-lab testing conditions?

Kia: A joint statement from the EPA and KMC says: “The fuel economy rating discrepancies resulted from procedural errors during a process called coast down testing at the companies’ joint testing operations in Korea.  Coast down testing simulates aerodynamic drag, tire rolling resistance and drivetrain frictional losses and provides the technical data used to program the test dynamometers that generate EPA fuel economy ratings.”

It is our understanding that the coast down data collection is a repeatable (5 times minimum) procedure where the vehicle is run up to 80 MPH and allowed to cruise in neutral until the speed falls below 9 MPH. Special devices in the vehicle measure environmental conditions (ambient temperature, humidity and barometric pressure), performance data, and speed and distance traveled during the vehicle’s deceleration.

In order to eliminate the effect of wind speed and direction, the test is performed multiple times (a minimum of 5 runs) on a completely flat, straight and dry road in both directions of the track.  Analysis of the recorded speed and distance information provides the vehicle’s road load force. This road load force factor is then applied to the remainder of the testing procedure which is completed under laboratory conditions.

Hyundai: A statement from HMA (Hyundai Motor America) reads as follows:  “The fuel economy rating discrepancies resulted from procedural errors during a process called “coastdown” testing at the companies’ joint testing operations in Korea. 

Coastdown testing simulates aerodynamic drag, tire rolling resistance and drivetrain frictional losses and provides the technical data used to program the test dynamometers that generate EPA fuel economy ratings.”

This reporter is on Twitter: @JoshuaDowling


Comments on this story

Displaying 3 of 9 comments

  • I would like to get more information on the class action. Can you help? I have recenty bought a new Ford EcoSport / EcoBoost Titanium in South Africa. They claim 5.7L/100km, but I can't get less than 7.9 and in woest cases on the open road less than 8.4? What is an acceptable deviation? How is this determined?

    Christopher McCreanor of south africa Posted on 21 October 2013 6:51am
  • I have a i30 CRDI, and I have to say that I'm also disappointed with the actual consumption... I drive from Wollongong to Chatswood every day, and the car already has close to 42000km... I already raised this issue with the dealership and unfortunately they simply brushed it off, and told me that the consumption will improve as the engine runs in, well but it didn't... Currently the actual consumption is around 5.03l/100km, which is very far from the 3.7l/100km on highway or even 4.5/100km announced by Hyundai as the expected consumption... So in my mind, this a serious issue and a good example of misleading advertising that must be stopped... Hyundai are clearly gaining customer thanks to their marketing approach, and I for one do intend to take this as far as I can, to expose them.

    John of Fairy Meadow Posted on 13 May 2013 1:55pm
  • Just achieved a 12.6 l/100km in a i40 in a 25 km trip in Sydney traffic which was admittedly heavy. But struggle to get below 10 in general driving. Much worse than my previous Camry - not a satisfied customer!

    Dispela Posted on 13 February 2013 8:20pm
  • Hyundai have understating fuel consumption numbers for some time and have finally been exposed. Poor engineering, makes you wonder what else they are hiding???

    The Realist Posted on 09 November 2012 9:38am
  • Economy stickers are a tool to compare different cars & help the purchase decision. There are way too many factors that affect consumption for a sticker on a windscreen to tell people how much fuel they will use. My modified 370KW FG XR6 Turbo returns 11.3L/100 in combined cycle which is 0.4L/100 below Fords figure despite producing 100Kw more than standard. Out on the open road this dips well into the 8L/100. I calculated this figure manually using the trip computer & L put in tank. Trip computers are estimates only and cannot be relied upon. If you want to reduce fuel consumption make sure you keep tyre pressures correct, use AC only when necessary, be gentle with the throttle and only ever use the highest grade fuel available (typically 98). Ultimately Michael is 1L/100K really that big of a deal? You also say that the car is only six months old. Your consumption should improve as the engine runs in and probably wont be at its best until after the first oil change.

    Josh of Brisbane Posted on 07 November 2012 8:46pm
  • Fuel stickers are a comparison tool only - designed to compare cars across manufacturers. They are NOT indicative of the fuel consumption the driver thinks they should get. If driven sensibly most cars will return under their figure. Keep your tyre pressures correct, use AC sparingly, only ever use 98 octane fuel and be gentle with the throttle. My modified 370KW FG XR6 Turbo returns 11.3L/100K's in combined cycle dropping well into single digits on the open road. This is 0.4L/100 below Fords figure despite the car producing 100KW more than standard. I calculated this figure off how much fuel is used and k's traveled not taken off the trip computer (which are an estimate only & cannot be relied upon). If you want to work out how much fuel your car is using calculate the figure manually. Ultimately Michael is 1L/100Km really that big of a deal?

    Josh of Brisbane Posted on 07 November 2012 8:36pm
  • I have a 2010 Sorento diesel and have no problem achieving the advertised 7.4L/100 advertised on the sticker (Mixed city and Highway). I don't get to upset if I don't actually get to that level either as so many factors play a part in it. Those stickers are a guide as I know if my wife drives the same car doing the school runs, short trips to work and the shopping centres, the figure will increase by 2L / 100 easy. Driving conditions and driving style change economy.

    Ken of Parramatta Posted on 06 November 2012 11:58am
  • My Hyundai fuel economy (i30 purchased new May 2012) is at 5.56 litres per 100k. It should be 4.5, given my stule of driving. There is something rotten in Australian govt monitoring of they allow Hyundai and Kia to avoid responsibility. Hyundai shoudl be held accountable.

    Michael Voorbij of Tenambit NSW Posted on 05 November 2012 9:01pm
  • Fuel consumption stickers mean jack in the real world. They are estimations and therefore cannot represent accurate fuel consumption figures, this is based on many factors, Wind, style of driving, temp, fuel type etc. It is meant to be seen as guage only. However being a Hyundai I30 and Kia Cerato owner I have found my fuel use is actually less than what the sticker stipulates.

    Danny of Hurstville Posted on 05 November 2012 2:48pm
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