June 12, 2014 at 11:35 pm

Ford will pay 200,000 owners for inflated mpg claims

The 2014 Lincoln MKZ Hybrid is one of the vehicles Ford Motor Co. is revising downward the fuel economy ratings. (uncredited / AP)

Ford Motor Co. is lowering the fuel economy ratings on six new cars, including the combined city/highway rating on the Lincoln MKZ hybrid by 7 miles per gallon.

It will make payments of $125 to $1,050 to more than 200,000 owners as compensation for the extra money drivers will spend on gas because of lower-than-promised fuel efficiency. Payments will vary depending on the vehicle, and if it was leased or purchased. If claims average $500, Ford would spend $107.5 million reimbursing owners. The automaker wouldn’t disclose its estimated costs.

The Environmental Protection Agency said Ford reported the mistakes after an internal audit. Ford will lower fuel-efficiency estimates on four versions of the 2014 Fiesta subcompact; the hybrid and Energi plug-in hybrid versions of the 2013 and 2014 Fusion midsize sedan; the C-Max Hybrid and Energi plug-in hybrid version; and the Lincoln MKZ Hybrid. Ford must correct the window labels within 15 days.

The move is a significant embarrassment to Ford, which has emphasized the fuel efficiency of vehicles in its lineup. And it’s the second time in a year that Ford has had to correct its mileage numbers.

“Ford is absolutely committed to delivering top fuel economy and accurate information,” said Alan Mulally, Ford president and CEO. “We apologize to our customers and will provide goodwill payments to affected owners. We also are taking steps to improve our processes and prevent issues like this from happening again.”

Ford had heavily touted the fact that eight of its 2013 models got 40 mpg or better. The revisions mean three of the eight don’t make that number: The Lincoln MKZ fell from a combined 45 mpg to 38 mpg; the C Max Energi plug-in hybrid and Fusion Energi plug-in hybrid fell to 38 mpg from 43 mpg, and the all-electric range of those models dropped to 19 miles from 21 miles.

Lincoln last year began a series of ads pitting the attributes of its MKZ Hybrid against competing luxury hybrid models. In one commercial, Lincoln positioned the MKZ as the “most fuel-efficient luxury hybrid in America,” comparing it to Lexus’ ES 300h. The 300h has a combined fuel economy estimate of 40 miles per gallon, which now tops the MKZ Hybrid’s 38 mpg average.

Raj Nair, Ford group vice president of global product development, said no one was disciplined and there was no intent to mislead consumers. He said engineers were not pressured to meet higher gas-mileage numbers.

Ford learned of a discrepancy in October but was unsure why. After confirming it had a problem in March, it notified EPA on March 28 and then conducted more than 100 tests.

Nair said the problem started in 2012 when Ford revised how it calculates fuel economy. He said the company erred in calculating aerodynamics in the wind tunnel.

The EPA’s investigation into how Ford made the mistakes is continuing, Chris Grundler, director of EPA’s Office of Transportation and Air Quality, said in an interview.

“We’re going to be continuing our investigation into the underlying causes for this error, and it is too soon for me to draw any broader conclusions about Ford process,” he said, saying this shows the need for continued vigorous enforcement by EPA. “The integrity of these new vehicle labels are paramount.”

Nair said Ford plans to confirm all EPA numbers before cars go on sale.

This is the second time in less than a year that Ford has restated fuel efficiency of its vehicles. In August, it dropped the fuel economy rating on the 2013 C-Max Hybrid from a combined 47 mpg to 43 mpg — a nearly 10 percent reduction — and said it would compensate owners for the worse-than-promised fuel economy. That restatement affected 32,000 customers. Those who purchased vehicles will receive $550; those who leased will get $325.

Ford has agreed to implement “enhanced testing procedures” under EPA oversight, Grundler said. “That will help ensure consumers that similar issues won’t happen in the future,” Grundler said. EPA staff will be involved in selecting Ford vehicles that will be audited and approving testing procedures.

“Automakers are moving quickly to address issues because they don’t want added embarrassment in the press and punishment from federal agencies,” said Michelle Krebs, senior analyst at AutoTrader.com. “This will certainly give some people pause to do a serious comparison” with other hybrids, she said, “but some people, if they want a hybrid, they’re going to buy a hybrid.”

EPA’s National Vehicle and Fuel Emissions Laboratory in Ann Arbor conducts fuel economy testing on some vehicles annually to ensure their performance matches the mileage and emissions data automakers submit. The EPA recently sent the list of vehicles it intends to spot-check this year to major automakers. Grunder said it is testing more vehicles this year, but declined to say how many.

These spot-checks are part of the oversight program from EPA to ensure vehicles meet tailpipe emission standards.

Ford isn’t the only automaker whose fuel mileage claims have been too high. In November 2012, Hyundai and Kia Motors — two Korean automakers controlled by the same conglomerate — admitted overstating mileage on nearly 1.1 million vehicles in North America sold since 2010, including about 900,000 in the United States.

The automakers set aside about $400 million to compensate drivers for the mileage difference and to resolve lawsuits filed by buyers. The EPA’s investigation into the Hyundai and Kia fuel-efficiency overstatement is continuing; Grundler declined to comment.

Ford’s stock fell on Thursday’s news, closing down 2.2 percent, or 37 cents a share, to $16.53.