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Hyundai and Kia overstated the gas mileage on most of their models from the past three years in an embarrassing blunder that could bring sanctions from the U.S. government and millions of dollars in payments to car owners.
Because of the inflated mileage, discovered during an audit by the Environmental Protection Agency, the Korean automakers must retrofit the window stickers on the cars, reducing their fuel economy figures by one to six miles per gallon depending on the model, the agency said Friday.
"Consumers rely on the window sticker to help make informed choices about the cars they buy," said Gina McCarthy, assistant administrator of the EPA's air-quality office. "EPA's investigation will help protect consumers and ensure a level playing field among automakers."
The EPA said its inquiry into the errors is continuing, and the agency would not comment when asked if the companies will be fined or if a criminal investigation is under way. But the EPA said it's the first case in which erroneous test results were uncovered in a large number of vehicles from the same manufacturer. Only two similar errors have been discovered since 2000, and those involved single models.
Hyundai and Kia executives apologized for the errors, said they were unintentional, and promised to pay the owners of 900,000 cars and SUVs for the difference in mileage. The payments, which will be made annually for as long as people own their cars, are likely to cost the companies hundreds of millions of dollars.
The EPA said it received about a dozen complaints from consumers that the mileage of their 2012 Hyundai Elantra compact cars didn't match the numbers on the window stickers. So staffers at the EPA's vehicle and fuel emission laboratory in Ann Arbor, Mich., included the Elantra in an annual audit that focused on cars that lead their market segments in mileage.
The audit turned up discrepancies between agency test results and data turned in by Hyundai and Kia, the EPA said. As a result, the automakers will have to knock one or two miles per gallon off the mileage posted on most of the models' window stickers. Some models will lose three or four miles per gallon, and the Kia Soul, a funky-looking boxy small SUV, will lose six mpg from the highway mileage on its stickers.
Hyundai and Kia are owned by the same company and share factories and research, but they sell different vehicles and market them separately. The companies said the mistakes stemmed from procedural differences between their mileage tests and those performed by the EPA.
"We're just extremely sorry about these errors," said John Krafcik, Hyundai's CEO of American operations. "We're driven to make this right."
The changes affect 13 models from the 2011 through 2013 model years, including seven Hyundais and six Kias. Window stickers will have to be changed on some versions of Hyundai's Elantra, Sonata Hybrid, Accent, Azera, Genesis, Tucson, Veloster and Santa Fe models, as well as the Kia Sorrento, Rio, Soul, Sportage and Optima Hybrid.
Michael Sprague, executive vice president of marketing for Kia Motors America, also apologized and said the companies have a program in place to reimburse customers for the difference between the mileage on the window stickers and the numbers from the EPA tests.
The companies will find out how many miles the cars have been driven, find the mileage difference and calculate how much more fuel the customer used based on average regional fuel prices and combined city-highway mileage. Customers also would get a 15 percent premium for the inconvenience, and the payments would be made with debit cards, Sprague said. The owner of a car in Florida with a one mpg difference who drove 15,000 miles would get would get a debit card for $88.03 that can be refreshed every year as long as the person owns the car, Sprague said.
If all 900,000 owners get cards for $88.03, it would cost the automakers more than $79 million a year.
For information, owners can go to www.hyundaimpginfo.com or www.kiampginfo.com .
Sung Hwan Cho, president of Hyundai's U.S. technical center in Michigan, said the EPA requires a complex series of tests that are very sensitive and can have variations that are open to interpretation. The companies did the tests as they were making a large number of changes in their cars designed to improve mileage. The changes, such as direct fuel injection into the cylinders around the pistons, further complicated the tests, Cho said.
"This is just a procedural error," he said. "It is not intended whatsoever."
Krafcik said the companies have fixed testing procedures and are replacing window stickers on cars in dealer inventories. Owners can be confident in their mileage stickers now, he said, adding that Hyundai will still be among the industry leaders in gas mileage even with the revised window stickers.
The mileage was overstated on about one-third of the Hyundais and Kias sold during the three model years, he said.
The Greek government faces widespread condemnation for prosecuting Kostas Vaxevanis, a 46-year-old investigative journalist who recently published the names of Greeks who may have sent billions to Swiss bank accounts.
Vaxevanis, one of Greece's best-known reporters, is in court in Athens on Thursday to face charges that he violated data protection laws by publishing the list of names in Hot Doc, the biweekly magazine he edits. If convicted, he faces up to five years in prison.
When the magazine hit newsstands Saturday, it set off a quicksilver response by the Greek judicial system, which is infamous for its glacial pace. Within hours, police issued a warrant for Vaxevanis' arrest. By Monday, he was facing a judge to set a trial date. When he emerged from the courtroom, more than 200 supporters applauded him.
"Journalism is printing what someone else does not want printed," he told the crowd, quoting George Orwell. "The rest is public relations."
Background Of The 'Lagarde List'
The list Vaxevanis published is named for Christine Lagarde, the head of the International Monetary Fund. In 2010, when Lagarde served as France's finance minister, she got a hold of the leaked names of more than 2,000 Greeks who transferred their money to HSBC bank in Switzerland.
Swiss bank accounts are legal, but are sometimes used to hide money and avoid taxes. Tax evasion, especially by the wealthy, cost Greece at least $36 billion in 2009.
Lagarde gave the list to her Greek counterpart at the time, Finance Minister George Papaconstantinou. Two years went by; nothing happened.
Vaxevanis, whose small team of investigative reporters works out of a small office in a weathered shopping mall, says that changed a few weeks ago when officials confirmed the existence of the list.
"Then we had ministers declaring that they couldn't find [the] list, that they lost it, that they slipped it into a pocket somewhere," he says. "It's like a cartoon. Greek society was watching, sickened. The whole world already thinks we're thieves. So now that this list is out there, it needs to be investigated."
Vetting The Names
About two weeks ago, Vaxevanis says, he received the list in an envelope, along with a letter, which claimed that the Lagarde List had been used to blackmail people.
"Whoever wrote that letter told me that we needed to get the truth out, or [Greece's] problems would just get worse," Vaxevanis says.
He says he and his reporters went through every name on the list to check its authenticity, which he vouches for. He estimates that more than $16 billion had moved through the accounts between 1998 and 2007.
The list includes industrialists, ship owners, and a few politicians and their relatives. But Vaxevanis was careful not to accuse anyone of tax evasion, or to publish the amounts in each account.
"We only gave their names and jobs," he says.
Papaconstantinou and his successor as finance minister, Evangelos Venizelos, have both taken heat for their inaction on the list. Papaconstantinou told a parliamentary panel last month that he couldn't use the list because an employee of HSBC had leaked the names illegally. Papaconstantinou said he then put the names on a memory stick, which he gave to Ioannis Diotis, the head of Greece's financial crime units. Diotis later passed it on to Venizelos, who now leads the center-left PASOK party.
'It's Outrageous'
Vaxevanis says he hoped the government would investigate the list now that he's made it public. Instead, the government filed criminal charges against him.
"It's outrageous," says law professor Aristides Hatzis. "Theoretically, this is supposed to be a democratic country and the place, as we like to say, where democracy was born. But this is not the way a proper democracy behaves. The authorities are treating a journalist who performed a public service like a criminal. It's going to backfire."
It's already angered Martina Loukidi, whose taxes come out of her tiny paycheck. She works at a flower shop, making $580 a month — half the monthly pay she earned last year.
She says working-class and middle-class Greeks are paying the price for austerity while the rich keep living large.
"The rich have connections," she says. "They cozy up to politicians who help them hide their money. Politicians should go to jail. Why should a journalist go to jail? Because he told the truth?"
Greeks also believe it's suspicious for the government to prosecute Vaxevanis so quickly, Hatzis says.
"They saw it exactly as it was — a cover-up," he says. "It's a way of treating things. It's a mentality."
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People often say China is a nation of contrasts: of wealth and poverty, of personal freedom and political limits. But that observation doesn't begin to capture the tensions and incongruities of modern life here.
For instance, in today's Shanghai, you can sip a $31 champagne cocktail in a sleek rooftop bar overlooking the city's spectacular skyline, while, just a few miles away, ordinary citizens languish in a secret detention center run by government-paid thugs.
Many foreigners are familiar with Shanghai's futuristic bar scene — less so its black detention sites. So, earlier this year, I asked a frequent inmate of the government's so-called "black jails" to show me the place where she's been detained a half-dozen times.
My guide was Li Yufang, a petite, feisty woman of 42.
"I was put in black sites many times," Li said matter-of-factly. "I didn't really count how many, but definitely more than 10 times."
Enlarge Frank Langfitt/NPR
It may appear cute and quaint and sit in the midst of a sprawling Shanghai park, but this cottage is used as a "black jail."