The Environmental Protection Agency's disclosure last month that Hyundai and Kia inflated fuel economy ratings over three years prompted industry observers to wonder whether the government is taking a more aggressive stance on policing the ratings, which largely are based on the honor system.
Consumers often have questioned automakers' gas mileage claims, especially when drivers' own calculations yield a different result. But rarely has the EPA called out a company and forced it to reimburse customers for exaggerating fuel economy.
"When something like this happens, the whole industry is hurt," said Robert Bienenfeld, senior manager of environment and energy strategy for Honda. "It's very important that people have confidence in the system. Even if there was not an event like this, there's skepticism about the numbers because people individually have different data."
Currently, automakers come up with their own ratings and the EPA spot-checks about 15% of models at its testing facility in Ann Arbor.
The Hyundai and Kia disclosure came days before President Barack Obama's re-election, which reinforces the government's Corporate Average Fuel Economy (CAFE) standard that requires automakers to reach a fleet average of 54.5 miles per gallon by 2025.
The Korean brands are lowering the fuel economy estimates on most of their 2012 and 2013 models by 1 to 6 m.p.g.
The EPA declined to comment or say whether its fuel economy laboratory in Ann Arbor will examine the legitimacy of other automakers' gas mileage claims more closely after the Hyundai and Kia problem.
But John D. Graham, dean of Indiana University's School of Public and Environmental Affairs who headed an interagency U.S. government group that directed CAFE standards under President George W. Bush, said the situation could trigger more intense scrutiny of mileage claims.
"The incident may cause more EPA auditing, but, more importantly, it may cause more consumers to complain when actual mileage does not meet the mileage ratings published by EPA," Graham said in an e-mail.
Fuel economy is the most important factor in the vehicle shopping process, according to Maritz Research's New Vehicle Customer Study, which surveyed 119,000 buyers of 2012 model-year vehicles. Of all small-car buyers, 25% cited fuel economy as their most important reason for buying, more than twice the percentage -- 10.1% -- citing the next factor: value for the money.
Hyundai and Kia have benefited from that trend because most of its vehicles are small and midsize. Neither makes a large pickup or truck-based SUV.
The EPA process
The Hyundai and Kia episode brings attention to a gritty, debatably sloppy, regulatory process virtually unknown to consumers. Automakers are responsible for delivering their own figures using rigorous tests, and the EPA's Ann Arbor lab selectively checks those numbers using its own internal processes.
"The EPA requirements do include a complex series of test and procedures," General Motors spokesman Greg Martin said. "We work closely with the staff at EPA to make sure that we have a common understanding and interpretation of those requirements."
Bienenfeld said Honda relies on a "standardized test" to deliver repeatable fuel economy figures.
"We submit the data to EPA before the vehicle goes on sale, and EPA has the option of performing confirmatory tests," he said. "If they choose a vehicle for confirmatory tests, then we ship the car to Ann Arbor."
Despite that process, the EPA didn't catch the Hyundai and Kia blunder until its investigators started examining complaints about the 2012 Hyundai Elantra.
Hyundai spokesman Chris Hosford said in an e-mail that the company had identified procedural errors associated with "coastdown" testing that led to inaccurate readings from complex machines called dynamometers. The processes, conducted in South Korea, were corrected immediately, Hosford said. About 900,000, or 35% of its U.S. sales from 2011-13 model years had inflated fuel economy ratings.
The misstep raised questions about a Hyundai marketing campaign that trumpeted vehicles that get 40 m.p.g. on the highway. After the EPA adjustments, neither Hyundai nor Kia offers any vehicles that reach that key fuel economy benchmark.
"They've used fuel efficiency as a core brand component in the last couple of years and have invested heavily in the fact that they have X amount of models that get 40 m.p.g.," Toyota Group Vice President Bill Fay said in an interview.
Hyundai's sales are up 8.2% through October, while Kia's sales are up 17.8%, according to Autodata. Hyundai vehicles such as the Sonata and Elantra have been so popular in recent years that Hyundai has struggled to keep up with demand.
Don't expect big change
In the aftermath of the revelation, several automakers said their engineers aren't making the same errors and it's not necessary to recheck their own numbers to avoid any potential backlash from the EPA.
"We're confident in the fuel-efficiency ratings that we have," Fay said.
One of the industry's challenges is that many consumers don't understand that the EPA's fuel economy ratings are a guide post, not a promise.
Honda's Bienenfeld said the EPA "numbers are precise and accurate," but consumers can get a much different performance based on how they drive. For example, if you accelerate fast, you'll burn more gas and get poorer fuel economy.
"That's the conundrum for us," Bienenfeld said. "While a lot of people might understand their fuel economy is different, there's some people that don't."
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