U.S. Auto Makers Face Fuel-Economy Dilemma

Touting “best-in-class” fuel economy and eye-popping Environmental Protection Agency ratings once was the norm for U.S. auto makers seeking to draw the attention of car buyers facing ever- increasing gasoline price hikes.

The marketing ploy worked for a while, with Hyundai at one point boasting 40 mpg (5.9 L/100 km) ratings on more vehicles than any other brand. But a crack in the strategy slowly widened as astute consumers began noticing their fuel economy wasn’t as advertised.

Hyundai and sister brand Kia were the first to be called out, prompting the two to apologize for their inflated-mileage claims and reimburse thousands of customers for their higher-than-expected fuel costs.

Ford was next to feel the sting when it unveiled its new hybrids, the C-Max and Fusion, claiming the models achieved a combined 47 mpg (5 L/100 km) city/highway. The influential buying guide Consumer Reports was the first to point fingers at Ford, when during internal testing, it was unable to achieve anywhere near the advertised fuel economy.

Although the auto maker was quick to point to differing driving styles, weather conditions and other outside factors that affect fuel economy, it was too late. Lawsuits quickly piled up, including a class-action suit filed against Ford by the California-based McCuneWright law firm.

That suit, a copy of which was obtained by WardsAuto, contends false advertising led to record sales of the C-Max in the car’s first two months in the market.

“Ford engaged in widespread misleading and deceptive advertisements regarding the real-world gas mileage of the C-Max and Fusion hybrid by promoting inflated gas-mileage numbers when the vehicles, in fact, fall substantially short of attaining in real-world, normal use,” the suit says.

The suit was filed on behalf of C-Max owner Richard Pitkin and is open to “all others similarly situated.” It asks for full reimbursement of the vehicle purchase price as well as unspecified damages.

Ford argues it strictly adheres to EPA testing in formulating its fuel-economy ratings and that many of its C-Max and Fusion hybrid customers have surpassed 47 mpg.

The auto maker is working with the EPA to determine if its test protocols, which were developed in the 1970s, could be changed to better reflect the fuel-economy benefits of new technologies such as hybrid-electric vehicles.

Ford also emphasizes new-vehicle window stickers are meant as estimates of the fuel-economy customers can expect to achieve, and results may vary.

“The EPA ratings are a very important common measuring stick, so that consumers are easily able to compare vehicles on an “apples-to-apples” basis,” Ford says in a statement provided to WardsAuto.

The EPA declines to comment on the matter, but a source close to the situation tells WardsAuto that unlike Hyundai, Ford is not being investigated by the agency and that it complied with federal-testing rules.

Ford, Hyundai and Kia likely are not the last auto makers to be affected by inaccurate fuel-economy ratings, and it’s likely to cause other brands to rethink their marketing strategies.

The real problem may lie in the EPA’s test cycle, which does not include real-world testing in an effort to mitigate variable outside factors, including weather and road conditions, from skewing results.

EPA Tests 15% of All New Models

The EPA tests vehicles on a dynamometer using two drive cycles. The first, Federal Test Procedure 1975, is run at a low-speed for 41 minutes with a 10-minute break. Speeds average 21 mph (34 km/h) and top out at 57 mph (92 km/h).

The second, higher-speed Highway Fuel Economy Test maxes out at 60 mph (97 km/h) with an average 48 mph (77 km/h). Neither test is run while using accessories, such as air conditioning.

Test vehicles are fueled with ethanol-free gasoline, which is not sold in the U.S. Gasoline sold at the pump typically contains about 10% ethanol, which can reduce a vehicle’s mileage.

The EPA tests 15% of all new models. The rest are tested by the auto makers, with most, including Ford, strictly adhering to EPA protocol, while some OEMs blend the federal test procedures with real-world testing.

The controversy is occurring despite minor modifications the EPA has made to its tests beginning with the ’08 model-year, which include vehicle-specific data to better reflect the affect of real-world driving conditions on fuel economy.

The new fuel-economy estimates reflect conditions such as road grade, high speed/rapid acceleration, use of air conditioning, load and the effects of different fuel blends.

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Even with the modifications, some critics argue EPA tests are outdated and ill-suited to accurately gauge the fuel-saving benefits of new technologies such as hybrids.

“The tests they use were defined in the 1970s and no longer reflect how people drive in the real world,” Don Anair, research director-Clean Vehicles Program for the Union of Concerned Scientists, tells WardsAuto. New technologies, such as onboard fuel-economy displays, have heightened consumer awareness of the mileage they are achieving, he adds.

The EPA believes the modifications made to its test procedures will better reflect real-world fuel economy, including hybrids.

“In vehicles that achieve better fuel economy, such as gasoline-electric hybrids, new city estimates will be about 20% to 30% lower than today’s labels,” the agency says. “And new highway estimates will be 10% to 20% lower.”

Such a precipitous drop in advertised hybrid fuel-economy likely will affect auto makers’ sales campaigns. Ford already is adjusting its strategy, with marketing chief Jim Farley contending fuel-economy claims are falling on deaf ears.

“If 92 kids in a class of 100 are best-in-class, what does best-in-class mean anymore?” he tells WardsAuto. “Based on that confusing environment, some companies are going to be rewarded by introducing new ways for consumers to see real-world fuel economy.”

Ford Already Adjusting Strategy

Farley calls Ford’s “Personalized Fuel Efficiency App Challenge” a first step in that direction. Focusing on mobile platforms, app developers will have access to Ford’s OpenXC connectivity research platform to create and test ideas with $50,000 in prize money from the auto maker on the line.

He expects the apps to take into consideration elements affecting real-world fuel economy, such as weather conditions, terrain, traffic congestion and, especially, individual driving styles.

The winning app ultimately would enable drivers to optimize their fuel efficiency and then share their information with others.

“We need to help customers understand the concept of personal fuel economy, based on their own individualized experiences, and give them tools to see, learn and act upon all the information available to know what to expect, how to improve and even offer guidance in their shopping process,” Farley says in announcing the challenge.

David Regan, instructor of advertising, Ad/PR department-Michigan State University, says auto makers face a dilemma when balancing the need to advertise fuel economy against potential lawsuits that could arise if real-world results come up short.

Fuel economy “is one of the core strengths of a smaller-type vehicle,” he tells WardsAuto. “If you take away the numbers, it is not as impactful.”

Regan says it may take some creative copywriting by automotive ad agencies to tout the fuel economy of vehicles without stating numbers.

While lawsuits are one potential pitfall if advertised fuel-economy numbers don’t translate to real-world experience, another is the damage caused to the entire brand, Regan says.

“It puts you in damage control with consumers that are now suspicions of any claims you make about any of your vehicles,” he says. “We buy brands we trust, and if we lose it we may not place investment in that brand.”

Despite the potential dangers of advertising fuel economy, its importance to consumers is profound and the numbers likely still will be touted by the auto makers, says Jack Gillis, director-public affairs, Consumer Federation of America.

According to a recent CFA survey, 88% of car buyers say fuel economy is an important factor in their next vehicle purchase, and most expect an increase in mileage with each new model upgrade.  “So fuel economy is top of mind for today’s car buyers,” Gillis says.

The controversy surrounding Ford and Hyundai mileage claims likely will have little impact on consumer sentiment, he adds, advising vehicle buyers to use EPA fuel-economy labels as a comparison between models and not what they can expect to achieve in real-world driving.

“I think most consumers understand the numbers are best used to compare on a relative basis,” he says. “So while a 37 mpg (6.3 L/100 km) sticker may not get you that, it’s better to purchase that (vehicle) than one with a 30-mpg (7.8 L/100-km) sticker.”

Some observers say a sweeping change to EPA tests may be the only way to achieve accurate real-world mileage estimates. But that option is unlikely, Concerned Scientists’ Anair counters.

“Tests are written into law for fuel-economy standards, so Congress would have to change them,” he says. “The EPA has worked within that constraint over the years to make adjustments, but changing the tests is not trivial.”

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