Korean automakers Hyundai Motor Co. and Kia Motors Corp. announced Monday that they have reached a record-setting $360 million settlement agreement to end the Environmental Protection Agency's two-year investigation into the company's exaggerated fuel economy ratings of 1.2 million 2011-13 U.S. vehicles.
The settlement, which also include the California Air Resources Board, was announced by EPA Administrator Gina McCarthy and Attorney General Eric Holder Monday morning. It is the largest of its kind.
The settlement includes a $100 million civil penalty, forfeiting $210 million in greenhouse gas emission credits and spending $50 million to ensure independent auditing of its current and future vehicles and "measures to prevent any future violations," EPA said, according to The Detroit News.
"This unprecedented resolution with Hyundai and Kia underscores the Justice Department's firm commitment to safeguarding American consumers, ensuring fairness in every marketplace, protecting the environment, and relentlessly pursuing companies that make misrepresentations and violate the law," Holder said in a statement, according to the publication. "This type of conduct quite simply will not be tolerated. And the Justice Department will never rest or waver in our determination to take action against any company that engages in such activities - whenever and wherever they are uncovered."
Back in Novemeber 2012, Hyundai admitted after an audit of its mileage claims by the EPA that it had overstated the fuel efficiency for approximately 1.2 million vehicles, or a quarter of its 2011-2013 model vehicles sold in the U.S.
The vehicles involved included models like the Elantra and Accent compact cars, the Santa Fe sport utility vehicle and Veloster coupe.
Kia admitted to overstating mileage claims for its Soul and Rio vehicles. About 600,000 of Hyundai's 2011-13 models and about 300,000 of Kia's 2011-13 models are affected by the settlement in the U.S.
The EPA was able to prove that the overstatements ranged from between 1 and 6 mpg, according to The Wall-Street Journal.
Ford Motor Co. is among other automakers facing possible fines for similar practices.
Hyundai and Kia have both agreed to reorganize their emissions certification group, revise test protocols and improve management of test data before they conduct emissions testing to certify their 2017 vehicles, the EPA said to The Detroit News. The automakers will also enhance employee training.
Both companies must audit their fleets for model years 2015 and 2016 before worrying about 2017 vehicles in order to ensure that vehicles sold to the public conform to the data provided to EPA.
"Hyundai has acted transparently, reimbursed affected customers and fully cooperated with the EPA throughout the course of its investigation," said David Zuchowski, president and CEO of Hyundai Motor America, in a statement. "We are pleased to put this behind us, and gratified that even with our adjusted fuel economy ratings, Hyundai continues to lead the automotive industry in fuel efficiency and environmental performance."
At the time, both automakers said the overstatements were the result of mistakes made by engineers running the mileage tests. The company then lowered its mileage claims and offered compensation to owners of affected vehicles.
The settlement is subject to a court review.