The companies released a joint statement saying customers of some 2010 to 2012 models will receive a pre-paid credit card that will reimburse them for the difference in the combined fuel consumption rating.
They will also add an extra 15 per cent to the amount as an "acknowledgment of the inconvenience."
Hyundai and Kia executives say the higher figures were unintentional errors.
They apologized and promised to pay owners of the 900,000 cars and SUVs worldwide 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 inflated mileage was uncovered in an audit of test results by the Environmental Protection Agency, which ordered the Korean automakers to replace fuel economy stickers on the affected cars. The new window stickers will have figures that are one-to-six miles per gallon lower 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."
Hyundai and Kia Canada said they have taken immediate action to make the necessary rating changes and process corrections after the EPA certification, which is accepted by Environment Canada for auto imports into the country.
"We are very sorry about the errors and we are committed to making sure the owners of every affected Hyundai vehicle are fully compensated," said Steve Kelleher, president and chief executive officer of Hyundai Auto Canada Corp.
"We want to assure them and all of our customers that the environmental features and characteristics that are so important to Canadian drivers are equally important to us."
Kia Canada president and CEO William Lee s part of Kia's success has been because of its ability to produce vehicles that meet both consumer and environmental needs.
"Kia Canada deeply regrets that this situation has occurred and will ensure all affected Kia customers will quickly receive fair compensation."
The EPA's inquiry into the overstated figures 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 agency said it's the first case in which erroneous test results were uncovered in such a large number of vehicles from the same manufacturer. Only two similar cases have been discovered since 2000, and those involved single models.
The EPA's findings come at a bad time for Hyundai and Kia, which have seen explosive sales growth in the U.S. partly because of advertising campaigns that touted gas mileage. Hyundai even poked fun at competitors who promoted special high-mileage versions of their cars, claiming that its cars had high mileage across the model lineup.
The EPA said it began looking at Hyundai and Kia when it received a dozen complaints from consumers that the mileage of their 2012 Hyundai Elantra cars fell short of numbers on the window stickers. Staffers at the EPA's vehicle and fuel emission laboratory in Ann Arbor, Mich., included the Elantra in an annual fuel economy audit.
The audit turned up discrepancies between agency test results and data turned in by Hyundai and Kia, the EPA said. As a result, the two automakers will have to knock one or two miles per gallon off the mileage posted on the window stickers of most of their models. 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.
The companies said the mistakes stemmed from procedural differences between their mileage tests and those performed by the EPA.
Automakers follow EPA procedures when conducting their own mileage tests, and the EPA enforces accuracy by auditing about 15 per cent of vehicles annually. .
"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 errors involve 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 the following models: Hyundai's Elantra, Sonata Hybrid, Accent, Azera, Genesis, Tucson, Veloster and Santa Fe. Kia models affected include the Sorrento, Rio, Soul, Sportage and Optima Hybrid.
Michael Sprague, executive vice-president of marketing for Kia Motors America, 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 per cent 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 .
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