New cars are required to have window stickers that clearly identify the car’s fuel economy. The stickers allow car buyers to easily compare one vehicle to another and also to estimate annual fuel costs. Most people accept these numbers as accurate, although there is an understanding that fuel economy estimates are based on idealized testing conditions, and that driving habits can significantly impact gas mileage. However, an EPA investigation into these numbers found that Hyundai and Kia overstated the reported fuel economy by one to six miles per gallon by allegedly choosing favorable results rather than average results from a large number of tests.

fuel

Source: fueleconomy.gov

In what is being announced as a “historic Clean Air Act settlement”, EPA announced that the companies will lower their fuel economy (MPG) estimates for the majority of their model year 2012 and 2013 vehicle models. The complaint at the center of the settlement alleges that the companies sold vehicles whose design specifications did not conform to the specifications certified to EPA, which led to the misstatements of greenhouse gas emissions. The automakers will pay a $100 million civil penalty, the largest in Clean Air Act history, and spend approximately $50 million on measures to prevent any future violations. The companies will also forfeit 4.75 million previously claimed greenhouse gas emission credits, which are estimated to be worth over $200 million.

Attorney General Eric Holder said that, “this unprecedented resolution with Hyundai and Kia underscores the Justice Department’s firm commitment to safeguarding American consumers, ensuring fairness in every marketplace, protecting the environment, and relentlessly pursuing companies that make misrepresentations and violate the law”. Cars currently on dealer lots will be re-labeled by the auto company with new window stickers reflecting the corrected mileage estimates. The mileage on most vehicle labels will be reduced by 1 to 2 MPG, and the largest adjustment will be 6 MPG highway for the Kia Soul.