Ford lowers fuel economy rating for six vehicles

[June 13, 2014]  By Ben Klayman

DETROIT (Reuters) - Ford Motor Co <F.N> said on Thursday it was lowering the fuel economy ratings on six of its models, including a number of hybrids, and would reimburse owners for the difference.

The No. 2 U.S. automaker said the ratings would be cut on its 2013 and 2014 model year hybrid and plug-in hybrid vehicles as well as most 2014 Fiesta cars. It was the second time Ford cut fuel ratings for the C-Max hybrid in under a year.

"We apologize to our customers and will provide goodwill payments to affected owners," Ford CEO Alan Mulally said in a statement. "We also are taking steps to improve our processes and prevent issues like this from happening again."

The restatement of mileage estimates is nothing new in the auto industry.

Last August, Ford - which has touted its superior fuel efficiency in the past - cut the ratings for the C-Max hybrid by up to 7 miles per gallon following complaints from consumers and experts that the model's actual mileage fell short of claims.
 

In 2012, an investigation by the U.S. Environmental Protection Agency showed that both Hyundai Motor Co <005380.KS> and its affiliate Kia Motors Corp <000270.KS> overstated fuel economy by at least a mile per gallon. The South Korean carmakers last December agreed to pay $395 million to settle lawsuits related to the matter.

"Ford isn't the first manufacturer to admit that it was optimistic in its EPA fuel economy ratings, and it might not be the last," said Jack R. Nerad, editorial director at Kelley Blue Book's KBB.com.

"The broad implications of this might spur EPA to be more restrictive in how its fuel economy rules and ratings are administered," he added. "This will gain attention in Congress as well."

In the latest case, Ford said it identified an error through internal testing and notified the U.S. environmental regulator. No adjustments on other vehicles are planned after review of the entire lineup, the company said.

The EPA said it conducted independent tests to confirm Ford's results and ordered the company to correct fuel economy labels on the cars within 15 days.

Ford estimated about 200,000 of the affected vehicles had been sold or leased in the United States, and affected owners would receive a "goodwill payment" of up to $1,050 for the estimated difference in fuel costs. Cars in dealer lots will be relabeled with new window stickers reflecting the corrected estimates.

Owners outside the country will be contacted by the automaker.

The largest change is for Ford's Lincoln MKZ hybrid, which saw its combined city and highway fuel economy value reduced by 7 miles per gallon. Other affected models include four versions of the Fiesta, the hybrid and Energi versions of the Fusion, and the C-Max hybrid and Energi.

Ford shares were off 2.3 percent at $16.51 in late New York trading.

(Additional reporting by Timothy Gardner in Washington; editing by G Crosse and Chris Reese)

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