The government says the civil penalty is the largest for a Clean Air Act violation in U.S. history.
The discrepancy was discovered after the EPA got complaints about lower-than-advertised mileage on Hyundai's Elantra compact. Audits discovered overstated mileage on the Elantra and other models from 2011 into 2013.
Hyundai says it made honest mistakes in interpreting complex EPA mileage test requirements. Neither company admitted liability and both maintain they complied with the law.
Generally mileage was overstated by one or two miles per gallon on 13 vehicles. But one vehicle's highway mileage was 6 mpg higher than the EPA tested.