Hyundai, Kia reach $400-million settlement over inflated MPG claims

Hyundai Motor America and Kia Motors America, the U.S. sales arms of the sibling South Korean automakers, said Monday they have reached a settlement in class-action litigation over inflating the fuel economy claims for their vehicles.

Hyundai will offer the owners of the models with the inflated ratings a lump sum payment that will average $353. The payment varies depending on whether the vehicle was purchased or leased. Kia’s average payment will be $667.

Owners can also decline the offer and stay on a previous plan initiated by the automakers last year. They issued special debit cards to owners to reimburse for the shortfall in the companies’ mileage claims and what the U.S. Environmental Protection Agency found is the lower, correct number. The cards also include a 15% inconvenience premium. Those owners, however, must report their actual mileage to their local dealers.

PHOTOS: Hyundai and Kia models with inflated MPG claims

Both automakers said consumers can also elect other options, such as a dealership credit of 150% of the lump sum cash payment amount, to use on service or repairs, or a credit of 200% of the cash amount toward the purchase of a new Hyundai or Kia vehicle.

“Kia Motors is a responsible company, and the proposed settlement enhances our goal of making things right for our customers by providing new reimbursement options,” said John Yoon, an executive vice president at the automaker.

Depending on which options owners take and how many participate, the settlement could cost the two companies about $400 million. The settlement covers about 600,000 Hyundai vehicles and about 300,000 produced by Kia.

A federal court in Los Angeles is expected to review the proposed settlement in early 2014. Later, owners of the affected vehicles will be sent notices informing them of the payments and their choices.

Last year, both Hyundai and Kia conceded that they overstated the fuel economy on nearly 1 million late-model vehicles.

The discrepancy was discovered by the EPA, which monitors fuel economy tests by automakers.

Hyundai and Kia blamed “procedural errors” at joint testing operations in Korea for the problem. They share automotive components and testing facilities.

After the car companies said they would issue the debit cards to reimburse owners for the extra money they are paying for fuel, some consumers objected and filed a series of lawsuits seeking class-action status.

Overall, the companies had overstated fuel economy ratings for 35% of the 2011-13 model year vehicles. The Hyundai vehicles include the Accent, Elantra, Veloster, Veloster Turbo, Sonata Hybrid, Azera, Genesis, Tucson and Santa Fe Sport.

Kia vehicles affected include the Rio, Sportage, Sorento, Soul and Optima hybrid.

Earlier this year, Ford Motor Co. said it overstated the fuel economy for its C-Max hybrid and offered a “goodwill” payment of $550 to people who purchased the car and $325 to those who leased the vehicle.

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