EPA tells Ford to lower fuel econony estimates on six models

Ford Motor Co. lowered fuel-economy estimates on some of its cars for the second time in less than a year, citing a computer-modeling error, and promised to compensate more than 200,000 customers.

Six models are affected, including the C-Max Hybrid, which is now rated at 40 miles per gallon, the Dearborn, Michigan-based company said in a statement Thursday. That’s down from an estimate revised lower last year to 43 mpg from 47 mpg.

“This is our mistake, plain and simple,” Raj Nair, Ford’s product development chief, said on a conference call. “We are apologizing to our customers.”

Payments to customers will be as high as $1,050 to owners of the Lincoln MKZ Hybrid and as low as $200 to owners of the Fiesta with a 1-liter engine, the company said.

Ford has heavily promoted fuel economy in advertising, citing high numbers to help sell hybrid models like the C-Max, said Michelle Krebs, an analyst with AutoTrader.com, a car research website.

“There is a real hard push to get as high a number as possible” on the window sticker, Krebs said.

Other models affected include the Fusion Hybrid, the C-Max Energi and the Fusion Energi plug-in hybrids.

“There was certainly no intent to mislead anyone,” Nair said.

EPA Requirement
Ford discovered an error in October on a single model, Nair said. By March, the company had confirmed a mistake in the software it uses to generate the U.S. Environmental Protection Agency estimates.

Nair declined to estimate how much Ford would spend on the payments to customers. The amount won’t have a material impact on the company’s financial performance, he said.

The EPA said it’s requiring Ford to correct the estimates. The agency oversaw Ford’s program to retest its entire fleet and confirmed the corrected results, it said in a statement.

Ford has agreed to implement more stringent validation tests under EPA oversight, the agency said. Cars on dealer lots will get new labels.

“The issue highlights the need for continued strong oversight of the fuel economy labeling program,” Chris Grundler, director of the EPA’s office of transportation and air quality, said in a statement. “Consumers need to trust that fuel-economy window stickers are giving consumers reliable and fair estimates of real-world fuel economy.”

Some 28 percent of shoppers on AutoTrader in May, up from 15 percent in January, considered fuel-efficient vehicles in May because of gasoline prices. Interest tends to pick up whenever costs at the pump rise, Krebs said.

“I don’t think it will hurt Ford, especially since they are handling it this way,” Krebs said. “Writing a check to consumers goes a long way toward making them happy.”