Ford revises fuel-economy rating on six models, plans to make goodwill payment to owners

Ford has discovered a mistake in its fuel-economy testing and has revised the reported mileage on six vehicle models, along with announcing a goodwill scheme to reimburse owners for the difference in fuel costs between the previously stated mileage and the updated figure, for vehicles that had changes in their combined fuel-economy rating. Ford is not being fined by the US Environmental Protection Agency (EPA), which administers fuel-efficiency testing and certifies the results that are communicated to consumers.

Ford identified the issue through internal testing - it was not the result of an external investigation or consumer complaint - reported the issue to the EPA in March, and worked with the EPA as the agency retested vehicles to determine the correct ratings. Ford's vice-president of global product development, Raj Nair, said that the first anomaly was discovered in October 2013, but the cause was not isolated until March. The six models that have received revised mileage figures are the Fiesta, Fusion, C-MAX, and Lincoln MKZ Hybrid, and Fusion Energi and C-MAX Energi plug-in hybrid electric vehicles (PHEVs). Ford has not yet estimated the total cost of the goodwill payments, but said that it will affect about 200,000 owners in the United States, 13,000 in Canada, and 2,000 in other markets that use US EPA fuel-economy labelling. There are no mechanical or software updates to the cars. Nair said: "It was our mistake, plain and simple, and we apologize to our customers." The company has changed its processes to ensure the mistake does not happen again, though no one will be dismissed over the issue. In a company statement, Nair said: "This is our error. When we see an issue, we address it. That is why we notified the EPA and lowered the fuel-economy ratings for these vehicles."

The factor at issue, the total road-load horsepower factor (TRLHP), is a common industry measure and consistent with EPA regulations. The TRLHP is a vehicle-resistance level used in vehicle dynamometer testing, which determines the fuel-economy ratings. The TRLHP is established through engineering computer models and validated through vehicle testing that includes physical track tests referred to as coastdown testing. Nair said that the coastdown test is typically much more accurate when modelled, because of the number of variables which can impact on the results. However, it is part of Ford's routine process to test production models in physical tests to validate the TRLHP results obtained through computer modelling. In this specific case, "Ford also discovered an error specific to how we correlate wind tunnel results into the TRLHP model. Ford's error was the result of a recent process change, which the company has since corrected," a company statement said. Because of the error, Ford has validated through physical testing the TRLHP for any vehicles which were tested after the process change, and has instituted "enhanced validation tests" to prevent the error happening again. The company determined these six models needed to be recertified; the others proved accurate. According to an EPA press release, the enhanced validation tests will be run under EPA oversight.

Dealers can expect new fuel-economy labels in about six days, according to Ford; the EPA says the company is required to correct the labels within 15 days. Dealers can continue to sell the vehicles while they wait for the new labels. Ford has set up customer websites for the Lincoln and Ford products, for which the company says that customers will receive payment by 30 September 2014. Nair declined to estimate the total cost, but said it would not impact financial results, as the warranty reserves on hand will cover the amount. The action also only impacts vehicles in countries that use the US EPA label numbers on miles per gallon (mpg).

Outlook and implications

This is the second time that Ford has had restated mpg for its recent hybrids. The first restatement was of the C-MAX hybrid in August 2013 (see United States: 16 August 2013: Ford restates C-MAX Hybrid fuel economy in the US). In both cases, Ford brought the change to EPA for adjustment after internal testing. There is often a discrepancy between EPA ratings and real-world fuel-economy results, a situation more pronounced with hybrid vehicles. In summer 2013, consumer advocates at Consumer Reports released results of their testing of 315 vehicles, finding that most hybrids and small turbocharged engines had fuel economy not consistent their EPA labels (see United States: 18 July 2013: Consumer Reports finds majority of hybrids, small turbocharged vehicles miss EPA mark; rates 2013 Ram 1500 top full-size pick-up). In that report, Ford was said to have hybrids that failed to deliver the EPA-certified mpg by a wider margin than most.

While Ford has handled the situation proactively and quickly, it follows other actions to help address the discrepancy between the EPA mpg and what consumers were seeing on the road, including updating calibration on most 2013 model-year hybrids in July 2013 (see United States: 17 July 2013: Ford to update calibrations in 2013-model hybrids to improve fuel economy). Ford's C-MAX sales have been declining, though it is not possible to accurately correlate the first mpg restatement to the sales decline as hybrid sales have struggled across the industry; the C-MAX is only available in HEV or PHEV forms.

This is in contrast to Hyundai having to restate fuel economy in 2012. Hyundai had been heavily advertising its top mpg results and only restated the figures after a lawsuit and after the EPA found the discrepancy in an audit, and settled about a year-and-a-half later (see United States: 12 July 2012: Hyundai facing consumer lawsuit over Elantra's advertised fuel economy, United States: 6 November 2012: Hyundai/Kia acknowledge underperforming fuel economy, vows to compensate owners as first lawsuit filed, and United States: 24 December 2013: Hyundai and Kia closer to settling over inflated fuel economy ratings - report).