Auto Outlook: Hyundai, Kia revise mileage

Unleash the lawyers.

A class-action lawsuit was filed within 48 hours after South Korean automakers Hyundai Motor America and Kia Motors Corp. apologized for overstating the fuel economy of their vehicles.

Hyundai and Kia have admitted the estimated mileage of more than 900,000 cars, trucks and sport-utes sold in the United States and 120,000 sold in Canada since 2010 was exaggerated and said it would compensate current and former owners with debit cards for the additional amount they spent on gasoline.

The automakers apologized in full-page ads in The Washington Post.

"We sincerely apologize for these errors, and our top priority is to make things right for you," their statement said.

That's easier said than done, but that's what the Korean automakers say they will do.

"We think our reimbursement program provides the best, quickest, and most customer-focused remedy," Hyundai Motor America spokesman Chris Hosford told The Detroit News. "We are fully compensating affected Hyundai owners for the additional lifetime fuel costs associated with our rating adjustment -- plus a 15 percent premium."

Hyundai said owners of affected vehicles "have responded very favorably to the plan," which would give an average Florida motorist who drove 15,000 miles a year about $88.

However, the mea culpa and offer of compensation did not stop a Cincinnati law firm from filing a 14-page suit in U.S. District Court seeking more than $5 million in damages.

The News said the reimbursement program could cost Hyundai and Kia more than $100 million in addition to any civil penalties exacted by the U.S. Environmental Protection Agency.

Hyundai and Kia revised its corporate average fuel economy for its entire fleet of 2012 vehicles downward 1 mpg to 26 mph -- but the adjustment for some specific vehicles was as much as 6 mpg. The Kia Soul compact crossover, popularized by those commercials featuring hip-hop hamsters, saw its mileage reduced as much as 4 mpg, depending on the model.

The automakers also retracted claims that three of its 2013 models, including the hot-selling Hyundai Elantra, get 40 mpg. Hyundai sold more than 1 million Elantras through October.

Consumer Watchdog, a consumer group, filed a lawsuit in California in July, claiming Hyundai misstated and inflated gas mileage for 2011 and 2012 Elantras. The car's revised fuel economy rating is 2 mpg less, 38 mpg in highway driving.

Industry experts say the mileage flap likely will reduce the resale value of Hyundai and Kia vehicles in the near term.

Consumer Watchdog President Jamie Court said consumers may end up with "residual values that are less than they paid for a product that doesn't deliver what they want," USA Today reported. "They advertised 40 mpg even when they knew no one would get 40 mpg."

Investors sent Hyundai Motor shares down more than 7 percent Monday.

Hyundai and Kia blame the overstated mileage claims on "differences in interpreting" results of fuel efficiency testing in the United States and South Korea, The Chosum Ilbo, an English-language Korean newspaper, said.

The companies said the inflated mileage claims were caused by "procedural errors" and said they had "corrected the test process."

Sung Hwan Cho, head of Hyundai-Kia technical centers in the United States, told the Detroit Free Press the misstatement was more a result of the complexities of the testing process rather than results in the information on a new vehicle window sticker at the dealer.

One key component called "road load" measures the resistance of a vehicle's tires on the pavement, the vehicle's wind resistance and how the parts of the drivetrain, engine, transaxle or transmission, work together.

"There are hundreds of different parameters that can affect this road load," he said. "Ambient temperature, wind speeds, atmospheric pressure."

Cho said Hyundai engineers had added steps to the testing process in 2010 different from the recommended EPA process in to improve the efficiency of the test.

The EPA does not test the fuel economy of every vehicle sold. The National Vehicle and Fuel Emission Laboratory in Ann Arbor, Mich., routinely tests 150 to 200 vehicles a year to make sure the mileage and emissions match the data submitted by auto companies to the EPA.

Suzuki ending U.S. sales of cars and trucks

After 27 years in the U.S. market, American Suzuki Motor Corp., the U.S. unit of the Japanese automaker, filed for Chapter 11 bankruptcy and said it would stop selling new cars and trucks in the United States.

Suzuki will continue to sell motorcycles, all-terrain vehicles and marine equipment in the U.S. market.

"The realignment is intended to better position ASMC for long-term success and is a return to the company's roots in the U.S. market, which began with motorcycles," Suzuki said in a statement.

The struggling small car specialist entered the U.S. market in 1985 and sold 102,000 vehicles just five years ago on the strength of such popular vehicles as the Grand Vitara SUV.

The bestselling Suzuki model in the U.S. this year was the crossover SX4. Although its mid-size Kizashi sedan received favorable reviews, sales were hit hard by the financial crisis and rising gasoline prices. Suzuki also was at a disadvantage because it imported all of its vehicles from Japan while other Japanese automakers like Toyota and Nissan have U.S. factories.

Sales declined to slightly more than 21,000 new cars in the first 10 months of this year, about 1,000 less than in same period of 2011. Although sales were up 5 percent last month from October a year ago, that's a far cry of Suzuki's ambition to sell 200,000 vehicles in the United States annually.

Analysts said by focusing on smaller vehicles Suzuki had surrendered a large segment of the U.S. market, but that it may sell more smaller, low-cost vehicles in emerging markets like Brazil, Russia, India and China, where automakers Nissan and Volkswagen are considering selling cheaper sub-brands.

American Suzuki Motor Corp. said it will honor warranties on its vehicles and offer parts and service through its dealer network

New car vehicle mileage best ever

The University of Michigan Transportation Research Institute says fuel economy of new vehicles sold in the United States in October averaged 24.1 mpg, the best in the history of the survey.

Mileage based on the EPA estimates on the window stickers was 4 mpg higher than estimated fuel economy in October 2007 reflecting a 20 percent improvement, and that includes corrected mileage for Hyundai and Kia vehicles.

The university's Eco-Driving Index, which estimates average monthly emissions of greenhouse gases generated by all U.S. vehicles, has improved 19 percent since 2007, the first year of the index. The Eco-Driving Index was for August.

Regular unleaded gasoline averaged $3.46 a gallon nationwide this week, 5 cents higher than a year ago.

The average fuel economy was calculated from monthly sales of new light-duty vehicles -- cars, trucks, SUVs, vans and pickups -- and the combined city-highway fuel-economy ratings in the EPA Fuel Economy Guide for the respective models, the Institute said in a release.