S.Korea toughens fuel economy rules after Hyundai mileage fiasco

SEOUL, April 30 Tue Apr 30, 2013 5:13am EDT

SEOUL, April 30 (Reuters) - Carmakers that overstate their vehicles' gasoline mileage will be fined more than $900,000 under new South Korean government rules aimed at reassuring consumers after Hyundai Motor Co's fuel economy fiasco last year.

The rules, announced by the Ministry of Trade, Industry and Energy on Tuesday, also reduce the acceptable margin of error on fuel efficiency to three percent from the current five percent.

Carmakers will also have to use more stringent guidelines to calculate fuel mileage, which will lead to a 3-5 percent drop in a vehicle's overall fuel economy on average.

Hyundai's popular mid-sized Sonata sedan, for example, will now have a fuel efficiency rate of 11.4 km per litre from the current 11.9 km a litre, the ministry said in a statement.

The measures are due to take effect from the second half of this year.

Last year, Hyundai and its Kia Motors Corp affiliate admitted over-stating mileage on more than one million vehicles mostly sold in the United States and Canada, and agreed to compensate owners for the additional fuel costs.

South Korea is one of the biggest and most profitable markets for Hyundai and Kia. The two firms control more than 70 percent of the market.

Hyundai, which combined with Kia is the world's fifth-biggest automaker, last week reported a 15 percent decline in quarterly net profit for January-March quarter, as it was hamstrung by weekend production stoppages and unfavourable currency moves. ($1 = 1107.3000 Korean won) (Reporting by David Chance; editing by Miral Fahmy)

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