Korean automobile makers Hyundai Motor Co. and KIA Motors Corp. have agreed to pay a combined fine of $300 million for overstating gas mileage lawsuit claims. In a settlement that could create an expensive example for other car companies, it is the largest punishment ever.

Hyundai and KIA are fined by the government due to its misstatement of gas mileage that estimated on about 1.2 million cars, USA Today reported. According to the federal Environmental Protection Agency (EPA) and the US Justice Department, the civil lawsuit penalty is the largest ever under the Clean Air Act.

The Hyundai and KIA lawsuit settlement ought to send an alarming message to other automobile makers drawn to inflate their gas mileage claims in the highly competitive car making industry. As said by Forbes, other companies including Ford Motor have also been enforced to restate their miles per gallon (mpg) claims in recent years.

"This type of conduct quite simply will not be tolerated," Attorney General Eric Holder said during a news conference.

"Businesses that play by the rules shouldn't have to compete with those breaking the law," EPA Administrator Gina McCarthy added. "This settlement upholds the integrity of the nation's fuel economy and greenhouse gas programs and supports all Americans who want to save fuel costs and reduce their environmental impact."

Car makers Hyundai and KIA, affiliates of Hyundai Motor Group, will pay a combined $100 million, for which Hyundai will pay $56.8 million and KIA the rest, in civil fines and forfeit regulatory credits valued at more than $200 million to settle a two-year-long investigation by the US Environmental Protection Agency and the Justice Department.      

Last year, Hyundai and KIA agreed to settle a class-action lawsuit over its gas mileage claims for a total of almost $400 million, paying buyers of affected vehicles an average of about $353 individually. The Wall Street Journal said Hyundai and KIA's mileage missteps have cost the company over $700 million.

Among other several other car maker companies that are allegedly involved in gas mileage lawsuit, Ford Motor Co. has acknowledged its overstating fuel-economy estimates during the past two years. Administration authorities refused to comment on whether Ford and other auto makers could face penalties.

"This is by far the most egregious case," McCarthy said at a news conference, referring to the Hyundai-Kia case. "We have caught other discrepancies, but those have not been systematic."

According to EPA, Hyundai and KIA chose promising results rather than average results from a large number of tests, and violations were discovered in EPA vehicle testing. Due to the improper testing procedures, the brands were forced in 2012 to lower gas mileage estimates by 1 and 6 mpg for a raft of model year 2011 through 2013 Hyundai and KIA vehicles, including the Hyundai Accent, Elantra, Veloster and Santa Fe along with the Kia Rio and Soul.

"Hyundai has acted transparently, reimbursed affected customers and fully cooperated with the EPA throughout the course of its investigation," Hyundai Motor America CEO David Zuchowski said. "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."

"KIA Motors is a responsible company, and the agreement with the U.S. Environmental Protection Agency is the result of good-faith efforts among the parties to resolve our issues," the company said in a statement. "We are pleased to have this matter behind us, and our priority remains making things right for our customers through our fair and transparent reimbursement program which remains in effect and unchanged by this settlement."

In the past decade, before the gas mileage lawsuits, both Hyundai and KIA have increased their shares of the US new-vehicle market particularly during the economic recession of 2008 and 2010 when consumers desired fuel-efficient and relatively low-priced vehicles, Reuters said.

Hyundai and KIA did not only agree to pay the fine for gas mileage lawsuit but the companies promised to improve their testing procedures by 2017 and must audit their forces for model years 2015 and 2016 to guarantee that vehicles matched EPA claims.