Hyundai-Kia agrees to pay $100 million for fuel efficiency exaggeration

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WASHINGTON, Nov 4 – The Hyundai-Kia Automotive Group has agreed to pay US$100 million for exaggerating fuel efficiency for more than a million cars sold in the United States, officials said Monday.

The South Korea automakers have been under investigation by the U.S. Environmental Protection Agency (EPA) over allegations that they overstated fuel economy for about 1.2 million cars spanning 13 models from the 2011 to 2013 model years.

The automakers also agreed to give up 4.75 million greenhouse gas emission credits worth about $200 million, which could have been sold to other automakers, and invest $50 million to improve efforts to certify future mileage claims, officials said.

The $100 million fine is the largest civil penalty ever secured under the Clean Air Act.

“This will send a strong message that cheating is not profitable and that any company that violates the law will be held to account,” Attorney General Eric Holder said at a press conference to announce the settlement. He also called it “historic.”

“This unprecedented resolution 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,” he said.

Cynthia Giles, assistant administrator of the EPA, also said that the penalty’s scale “reinforces our commitment to level the playing field for automakers that play by the rules.”

After allegations surfaced of fuel efficiency inflation in late 2012, the automakers voluntarily adjusted their fuel economy ratings for about one-quarter of their 2011-2013 model vehicles, reducing their combined fuel economy by one to two miles per gallon.

They also took steps to compensate customers for additional fuel costs associated with the rating change.

“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. “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.”