Hyundai, Kia fined in the US for overstating fuel mileage

Korean carmakers Hyundai Motor Co and affiliate Kia Motors Corp will pay $350 million in penalties to the US government for overstating fuel economy ratings in the biggest settlement of its kind, Reuters reported.

The deal comes in addition to the $395 million the automakers agreed to pay last December to resolve claims from the owners of the vehicles. With the development the companies' total cost for the mileage overstatements stands at over $700 million.

Yesterday's settlement with the US Environmental Protection Agency, the US Department of Justice as also the California Air Resources Board resolves an investigation of the South Korean carmakers' 2012 fuel economy ratings. The penalties come as the  largest ever under the Clean Air Act.

Attorney general Eric Holder said this would send an important message to automakers around the world that they must comply with the law.

Under the agreement involving the sale of 1.2 million cars and SUVs, the South Korean car firms would pay a $100 million penalty, spend around $50 million to prevent future violations and forfeit emissions credits estimated to be worth over $200 million.

The greenhouse gas emissions that the forfeited credits would have allowed equal the emissions from powering over 433,000 homes for a year, according to the EPA.

The fine follows a two-year investigation into how Hyundai and Kia tested their cars to ensure they met the EPA's emission standards, Gant Daily reported. The two companies were accused by the government of selective data communication and manipulating road tests to inflate the fuel efficiency ratings of 1.2 million vehicles.

With the disputed numbers, Hyundai claimed its cars provided 40 miles to the gallon, and led dealers to show bogus efficiency information to consumers - which, the government and the competition said unfairly weighted the market in their favour.

However, neither company had admitted fault in this settlement - both companies blamed vague EPA testing procedures for the inaccurate labels.

EPA director Gina McCarthy told reporters the settlement demonstrated that the agency could effectively use the Clean Air Act to enforce relatively-recent greenhouse gases regulations.

According to commentators, the hefty settlement could set a precedent for other automakers who had flouted the EPA rules in the past, such as Ford and Mercedes-Benz.