Ford Motor Co. share price down, cuts fuel economy ratings for six models

Ford Motor Co., the second-largest US car manufacturer, reduced the fuel-economy estimates for six of its vehicles, including all of its hybrids, and promised to reimburse about 200 000 car owners.

The company announced that the largest change in fuel efficiency values received the Lincoln MKZ hybrid, whose combined city and highway fuel economy was reduced by 7 miles per gallon. Meanwhile, the C-Max Hybrid received a second downward revision to 40 miles to the gallon after its fuel efficiency value was trimmed last year to 43 miles per gallon from the initial 47 mpg. Other affected models include the hybrid and the Energi versions of the Fusion, the C-Max Energi and three versions of the Fiesta.

Raj Nair, Ford’s product development chief, said, cited by Bloomberg: “This is our mistake, plain and simple. There was certainly no intent to mislead anyone. We are apologizing to our customers.”

Having relied heavily on fuel efficiency advertisement to boost sales, especially for hybrid vehicles, Ford said it will compensate more than 200 000 customers with a “goodwill payment” for the estimated difference in fuel costs. Owners of the Lincoln MKZ Hybrid will receive as much as $1 050, but people who have bought the small Fiesta will be paid only $200.

Mr. Nair said Ford found an error on a single model last October, but in March the car maker had confirmed a flaw in the software used to generate fuel efficiency values for the US Environmental Protection Agency. The EPA said it conducted independent tests to confirm Fords results and ordered a correction in the respective models fuel economy levels within 15 days.

Ford said it had reviewed its entire lineup and no other mistaken values were found. The company declined to estimate how much money Ford would spend on reimbursing customers.

Jack R. Nerad, editorial director at Kelley Blue Books KBB.com, said, cited by Reuters: “The broad implications of this might spur EPA to be more restrictive in how its fuel economy rules and ratings are administered. This will gain attention in Congress as well.”

Analysts reckon Fords move could influence other car manufacturers to be more strict with their fuel efficiency estimates, especially given the fact that hybrid car buyers are much more sensitive about fuel consumption compared to conventional car drivers.

Ford is not the first car manufacturer to receive complaints about the mismatch of EPA labels and real-world fuel efficiency levels. In May, consumer reports stated the 2014 Honda Accord Hybrid averages 40 miles to the gallon, compared with the official 47 mpg.

In 2012, Hyundai Motor Co. and its affiliate Kia Motors Corp. relabeled most of their top sellers in the US after an investigation by the EPA showed that the companies overstated fuel efficiency by at least 1 mpg. This costed the two car makers $395 to settle related lawsuits.

Chris Grundler, director of EPAs Office of Transportation and Air Quality, said, cited by the Wall Street Journal: “Consumers need to trust that fuel economy window stickers are giving consumers reliable and fair estimates of real world fuel economy.”

Ford Motor Co fell by 2.25% in New York on Thursday do close the session at $16.52 per share, marking a one-year change of +7.48%. The car maker is valued at $66.83 billion. According to CNN Money, the 15 analysts offering 12-month price forecasts for Ford Motor Co have a median target of $19.00, with a high estimate of $23.00 and a low estimate of $12.00. The median estimate represents a +15.01% increase from the last price of $16.52.