Korean automakers Hyundai and Kia will pay the US government a $100 million civil penalty to end a two-year investigation into overstated gas mileage figures on window stickers on 1.2 million vehicles.
The penalty, announced Monday by the Justice Department and the Environmental Protection Agency, is the first under new rules aimed at limiting the amount of heat-trapping gases cars are allowed to emit. Those regulations are a cornerstone of President Barack Obama’s plans to combat global warming and are achieved largely through improving vehicle fuel economy.
The payment could also serve as a precedent for other automakers who overstate mileage in violation of the Clean Air Act. Attorney General Eric Holder said it underscores the need for car companies to be honest about their compliance with emissions standards.
Under the settlement, Hyundai-Kia will forfeit greenhouse gas credits worth more than $200 million because the affected vehicles will emit about 4.75 million more metric tons of greenhouse gases than the automakers originally claimed. The credits could have been sold to other automakers who aren’t meeting emissions standards.
Hyundai-Kia must also audit test results on current models, and set up an independent group to certify future test results, at a cost of around $50 million.
Officials said the misrepresentations put other car companies at a competitive disadvantage, especially since fuel economy is seen as a critical factor that “consumers think about when they’re going to buy a car,’’ said EPA Administrator Gina McCarthy.
“That tilts the market in favor of those who don’t play by the rules and it disadvantages those that actually do play by the rules,’’ he added.