Hyundai Motor Co. and its sister brand Kia Motors Corp. said Tuesday that they agreed to pay $395 million to settle a class action lawsuit brought on by allegations that the carmakers inflated the fuel economy of some vehicles sold in the United States.

The two flagship companies belonging to Hyundai Motor Group, South Korea’s second-largest family-run conglomerate, said a payment will be made to around 600,000 Hyundai owners and 300,000 Kia owners who bought 2011-2013 model cars.

The lawsuit was instigated when suspicions emerged last year that the corporate cousins overstated their gas mileage gallon numbers that gave incorrect information to consumers. The U.S. Environmental Protection Agency took steps to check the cars accused of the mileage discrepancy and ordered a downgrade of MPGs in 13 models, such as Hyundai’s Genesis, Azera, Veloster, Accent, Santa Fe and Tucson, and Kia’s Optima Hybrid, Soul and Sorento.

Under the settlement, Hyundai will pay consumers $210 million, while Kia will give $185 million.

Each owner will get an average of $367, and will be given the choice of selecting a one-time lump payment or opting for annual reimbursements that are already underway in the North American country.

“The settlement is not separate from the $88 that Hyundai and Kia have agreed to pay consumers on an annual basis,” said a company source, who declined to be identified. He said that the settlement is valid only in the United States and does not affect consumers in the home market.

The insider said that the plaintiffs had already agreed in principle to the reimbursement plan drawn up by the carmakers in February, with the latest agreement being the result of details that were worked out by all parties.

“Hyundai and Kia sought a quick settlement so as maintain the high degree of trust that it has built up in the U.S. market,” the manager-level official said. The class-action suit has been assigned to a federal court in Los Angeles

Hyundai and Kia still need to get final approval from the judge handling the case for the settlement to be concluded. The companies hope to end the legal battle early next year. (Yonhap News)