Hyundai Motor Co and its affiliate Kia Motors Corp will pay a $100 million penalty for selling cars with lower fuel economy than the companies had claimed in what U.S. authorities said on Monday was the largest such accord to date.
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The settlement, with the U.S. Environmental Protection Agency, the U.S. Department of Justice and the California Air Resources Board, resolves an investigation of the carmakers' 2012 overstatement of fuel economy ratings.
Under the civil accord, which involved the sale of 1.2 million cars and SUVs, the companies will also spend around $50 million to prevent future violations, and forfeit emissions credits estimated to be worth over $200 million, U.S. authorities said. The credits represent the difference between the original and restated data.
"Businesses that play by the rules shouldn't have to compete with those breaking the law," EPA Administrator Gina McCarthy said in announcing the settlement.
McCarthy said Hyundai and Kia had committed the most egregious violation of the reporting standards, but she declined to say whether other violators may also be fined.
In November 2012, Hyundai and Kia conceded they overstated fuel economy by at least a mile per gallon on vehicles after the EPA found errors for 13 Hyundai and Kia models from the 2011 to 2013 model years.
Hyundai announced Monday that it would be adjusting the cars' reported fuel economy by 1 to 2 miles per gallon.
Hyundai and Kia both gained bigger shares of the U.S. new-vehicle market in the past decade, particularly during the economic downturn of 2008 to 2010 when consumers saw bargains in their lineups of fuel-efficient and relatively low-priced vehicles.
"We are pleased to put this behind us," Hyundai U.S. chief David Zuchowski said in a statement. The company added that it believes its process for testing vehicle fuel economy meets U.S. guidelines, and the overstatement was a result of a data processing error.
Last December, both South Korean automakers agreed to pay a total of $395 million to settle lawsuits filed by owners of cars affected by the overstatements of fuel economy ratings. Hyundai's share of that was $210 million.
Hyundai's U.S. chief at the time, John Krafcik, stepped down after his contract expired at the end of last year.
The Justice Department is not commenting on whether any Hyundai or Kia employees would be criminally charged, said Sam Hirsch, acting assistant Attorney General for the Environment and Natural Resources Division. (Reporting by Aruna Viswanatha and Julia Edwards in Washington and Ben Klayman in Detroit, editing by Ros Krasny and Susan Heavey)