Should I Send $550 Back to Ford?

(Photo: zaneology)

(Photo: zaneology)

My family liked our new Ford C-Max hybrid so much that we bought a second one just a few months later.  But in between the two purchases, I learned something that made me think that in buying the second car I might also be buying a cause of action. 

Before the second purchase, I learned that Richard Pitkin of Roseville, Calif., had brought suit against Ford for overstating the C-Max’s fuel efficiency.  It apparently is too good to be true that a C-Max can achieve 47 mpg both in the city and on the highway.  

Sure enough, two weeks ago, two $550 checks arrived in the mail because Ford had dropped its official mileage estimate from 47mpg to 43mpg.  Ford calls the money a “goodwill payment.” 

The company says that the $550 represents the cost difference between what a car owner will end up paying at the pump and what they were led to believe they would pay.  

I’ve had a hard time replicating their estimate.  In this spreadsheet, I assume that the gas will cost $3.50/gallon (about the 2-year average) and that the car is driven 15,000 miles/year (the EPA’s average estimate) for 10 years and that C-Max owners can invest their goodwill payment at an interest rate of 5 percent.  With these assumptions, I estimate that the compensating payment should have been $802 per car – about 46 percent higher. 

My estimate also crucially assumes that the true fuel efficiency is the revised Ford claim of 43 mpg.  If you’re getting the average gas mileage my cars are—34 mpg (which blinks cheekily on the dashboard every time I turn the car on) then the estimate jumps to almost $3,300.  

Fuelly.com—a crowd-sourced fuel economy aggregator—reports that the most common mpg number for the C-Max is 40mpg, which would produce a compensating damage of $1,510.  Consumer Reports says 37 mpg, suggesting that $2,330 would be the appropriate compensation.  You can click here link to download an Excel spreadsheet that lets you play around with the assumptions and produce your own estimate. 

At the end of the day, Ford might not be allowed to unilaterally decide what the fair amount of compensation is.  In June, the Judicial Panel on Multidistrict Litigation consolidated several suits against Ford into one class-action lawsuit in the Southern District of New York on behalf of all Ford hybrid owners.  

But as far as I’m concerned, it’s not clear whether I was harmed by Ford’s representation with regard to my second purchase. Pitkin’s lawsuit back in December stated that he “reasonably believed that the C-MAX Hybrid would actually achieve 47 mpg when driving in the real world.”  But I bought my second C-Max after I already had some idea that I wouldn’t be getting 47 mpg.  So it’s not clear that I relied, to my detriment, on the misrepresented fuel efficiency.  Should I send Ford back the second check?

TAGS: ,

Leave A Comment

Comments are moderated and generally will be posted if they are on-topic and not abusive.

 

COMMENTS: 43

View All Comments »
  1. adam says:

    What good would sending back the check do?

    Ford seems to have blatantly lied about the MPG estimates of this car to make it look more appealing compared to other hybrids and has gotten off with little to no penalty. The check is for anyone that purchased one of these vehicles because of their ‘mistake’.

    If accepting the check would cancel any future payments due to ford misleading customers, then yes, send it back. I wouldn’t accept it, that amount is far too small.

    Thumb up 6 Thumb down 6
  2. Daniel says:

    The real question is, why does the EPA’s flawed test get used anyway? I haven’t had a car get even close to the EPA rating in quite a while… Well unless I go 55 mph on the highway. Mileage drops off quickly after that because automakers intentionally design transmissions to get peak mileage at 55-60 mph to get good EPA scores KNOWING that it will reduce actual mileage in the real world. If the EPA raised their highway speed limit test to 70 mph, cars would be more fuel efficient at the speeds people actually drive on the highway. Maybe we should get rid of the EPA test altogether and have independent agencies develop repeatable real world tests that give better indications of fuel economy rather than let the government keep issuing numbers based on a flawed testing methodology.

    Well-loved. Like or Dislike: Thumb up 61 Thumb down 4
    • Taylor Marks says:

      Hidden due to low comment rating. Click here to see.

      Disliked! Like or Dislike: Thumb up 2 Thumb down 13
    • Armando says:

      I drive a 2011 manual transmission GTI. Advertised gas mileage is 21 city 31 highway. My lifetime gas mileage is 32.7 mpg. I do a lot of highway driving but I do live in the city and drive in traffic often.

      I think a lot of it has to do with how you drive. The GTI has a digital display that shows gas mileage real time, which I find makes me a lot more conscious of my driving and how it affects the mpg.

      Anyway overall I do agree the majority of EPA estimates are completely bogus.

      Well-loved. Like or Dislike: Thumb up 9 Thumb down 1
      • James says:

        Sure the EPA estimates are “bogus”, in that for any car the mpg is going to vary widely, depending on how it’s driven. The EPA test is supposed to a) be done the same way for all cars so it can be used for comparison; and b) to a lesser extent, represent the mpg an averagely-competent driver would get.

        So if Joe Leadfoot averages say 25% under the EPA numbers, he will probably get about 25% less from any car he buys. Conversely, people like you and me will consistently beat EPA numbers. But Joe isn’t getting less than EPA because the test is bad, but because he’s not a very good driver.

        Thumb up 8 Thumb down 6
    • davep says:

      The EPA “highway” test isn’t driving non-stop at a constant speed of 55mph. It’s more of an urban higher speed road test (there’s a fairly wide variation in speed). It’s nothing like what people think of as “highway” driving.

      Efficiency drops off quickly as speeds increase even if the transmissions are tuned for higher speeds. You can blame aerodynamics for that.

      Well-loved. Like or Dislike: Thumb up 10 Thumb down 0
    • Jerry McCoy says:

      Daniel said, “maybe we should get rid of the EPA test altogether and have independent agencies develop repeatable real world tests that give better indications of fuel economy rather than let the government keep issuing numbers based on a flawed testing methodology”.

      We already have that. Consumers Report does this on almost every car they test. They call it the Overall Real World MPG. Their rating on the C-Max Hybrid was 37 mpg.

      Thumb up 3 Thumb down 0
  3. Jeremy says:

    Turn it into a real “goodwill payment” and donate it

    Thumb up 4 Thumb down 2
  4. Chris says:

    No, you should cash the cheque and move on

    Thumb up 4 Thumb down 2
  5. Dave saunders says:

    5% interest? Where do I sign up?

    Well-loved. Like or Dislike: Thumb up 40 Thumb down 0
  6. Taylor says:

    I see both sides of the coin here and understand why you appear to have a certain level of internal conflict over the matter. I am leaning, however, towards you keeping the second check. I wouldn’t think of it as relying on false information to your detriment, but rather a sort of “cash back rebate” on the car itself.

    You mentioned that you purchased the cars just a few months apart. Now it is unclear whether they were both new or used or one of each (not that that is important), but I doubt that the second car was discounted in any way regarding the drop in estimated fuel efficiency (I could be wrong on that). The price of the car is the present value of all benefits and functionality the car will provide combined. I am assuming the second car you purchased was priced with 47 mpg in mind when a more realistic rate would be 43 mpg (or maybe lower). Whether you realized this asymmetry at the point of sale is irrelevant. Use the money to offset this difference.

    If you continue to feel guilty about keeping the second check, invest it back into Ford stock and increase demand for the security by a negligible amount (Might not be negligible if everyone used their check in this manner) and let it sit for > 1 year.

    Interesting situation; no real right answer. Best of luck.
    Keep em coming Steven and Stephen. <3 Freakonomics.

    Thumb up 4 Thumb down 0
  7. Patrick says:

    Use the money to invest in Toyota stock

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0
  8. Sefton says:

    Fuel consumption depends a lot on how you drive.

    Thumb up 4 Thumb down 0