Hyundai-Kia Reaches $395 Million Settlement on False Fuel Claims

Hyundai Motor Co. and its Kia Motors affiliate have agreed to pay about $210 million and $185 million, respectively, to an estimated 900,000 customers to compensate for the companies' inflated U.S. fuel economy ratings.

The agreement stems from the revelation in November 2012 that both brands manipulated fuel economy tests to boost their U.S. government ratings for combined city-highway ratings by as much as 4 miles per gallon. The news spawned dozens of lawsuits and prompted the Environmental Protection Agency to reduce companies' fleet average fuel economy to 26 mpg from 27 mpg for the 2012 model year.

The preliminary settlement covers about 600,000 of 2011-2013 vehicles sold in the U.S. by Hyundai and 300,000 vehicles sold by Kia. A California district court judge is expected to review the deal in early 2014.

Affected owners can opt to take a single payment of as much as $353 (Hyundai) or an average $667 (Kia). They may instead choose to remain in a 2012 program that reimburses them annually for higher fuel costs plus 15% for as long as they own their vehicles.

Other alternatives include converting 150% of their settlement to a credit at their dealer or 200% of the lump-sum payment toward a new vehicle.