[Editorial] Fuel economy

By Korea Herald

Seoul needs to avoid trade disputes

  • Published : Jun 29, 2014 - 20:51
  • Updated : Jun 29, 2014 - 20:51
A turf war between two ministries over how to measure vehicle fuel efficiency has resulted in toughened mileage rules, which could benefit consumers but will make life more difficult for automakers.

On Thursday, the Ministry of Land, Infrastructure and Transport announced that it would fine Hyundai Motor Co. and Ssangyong Motor Co. as it found that they had inflated the mileage figures of the Santa Fe DM 2WD and the Korando Sports 4WD AT6, respectively.

In a separate announcement, however, the Ministry of Trade, Industry and Energy contradicted the Transport Ministry’s decision, saying that its own tests found that the two models’ fuel economy as reported by the producers two years ago was accurate.

The Energy Ministry, meanwhile, said it would fine four foreign carmakers as they have been found to have overstated the fuel efficiency of some of their models. The four manufacturers were Audi, Volkswagen, Chrysler and BMW.

It is the first time that the government has fined automakers, domestic or foreign, for inflating the fuel efficiency of their vehicles.

But the two ministries’ contradictory announcements on Hyundai and Ssangyong have left many confused. The discrepancy resulted from the fact that they conducted tests under different environments and using different methods.

The Ministry of Strategy and Finance, which is responsible for policy coordination among economic ministries, has sought to resolve the differences, but to no avail. Neither could the Office for Government Policy Coordination under the Prime Minister’s Office mediate the dispute.

A compromise between the two ministries has been impossible because they are engaged in a fierce turf war. The specter of conflict loomed last year when the Transport Ministry decided to check the accuracy of fuel efficiency figures for passenger cars.

The move was prompted by the lawsuits filed against Hyundai and Kia by American consumers over the Korean carmakers’ alleged overstatement of gas mileage. The ministry faced pressure from domestic consumer organizations to inspect vehicle’s fuel economy.

But the Transportation Ministry’s inspection overlaps with that of the Energy Ministry, which is responsible for certifying passenger cars’ fuel efficiency. In Korea, as in many other countries, testing is done first by automakers. The Energy Ministry conducts tests on samples to see whether the test results submitted by automakers are accurate.

The Transportation Ministry’s intervention is expected to benefit consumers, as it has made it more difficult for auto manufacturers to overstate their cars’ efficiency.

But for automakers, it spells trouble. In the first place, Hyundai and Ssangyong are likely to face a flood of compensation suits from consumers who own the two vehicle models.

Automakers are more worried about dual regulation. Now they have to undergo the certification process and then face the Transportation Ministry’s fuel economy checks. To minimize confusion, the Finance Ministry has told the two ministries to use identical criteria in measuring mileage. But this is not much comfort for automakers.

The toughened mileage inspection is cause for concern for foreign car manufacturers as well. The four automakers to be fined by the Energy Ministry said that they could not accept the ministry’s latest test results because their models all passed its tests two years ago.

A bigger problem with dual regulation is that it could trigger trade disputes. Experts note that carrying out post-certification fuel economy inspections goes against the free trade agreements signed with the United States and European Union.

Strengthening the fuel economy rules is a step in the right direction. But the government needs to avoid unnecessary trade disputes with foreign countries.