Auto giant Ford Motor Co is set to pay out A$10 million (US$7.6 million) for its “unconscionable” handling of gearbox complaints in Australia after a court yesterday slugged the auto manufacturer with a record penalty.
The Australian Competition and Consumer Commission began legal action against Ford last year after the auto manufacturer failed to properly deal with thousands of complaints about shuddering in PowerShift transmissions fitted to its Fiesta, Focus and EcoSport models.
“Despite knowing that shuddering was a symptom of the quality issues with the vehicles, Ford frequently told customers that shuddering was the result of the customer’s driving style,” commission Chairman Rod Sims said in a statement.
“Ford knew that the symptoms of the quality issues with the vehicles were experienced intermittently, but required customers to demonstrate them on demand in the presence of a dealer in order for repairs to be undertaken,” Sims said.
The payout matches the largest-ever handed down under Australian consumer law, the commission said, equalling a US$10 million penalty against supermarket chain Coles in 2014 for misusing its bargaining powers against suppliers.
THREE ISSUES
“Ford knew that its vehicles had three separate quality issues, but dealt with affected customers in a way which the Court has declared to be unconscionable,” Sims said.
About 75,000 cars fitted with the PowerShift transmission have been sold in Australia and over 10,000 people may be eligible for remediation after making complaints between May 2015 and November 2016.
“We were overwhelmed with the volume of complaints and, while it was not intended, over a ten-month period our processes were inadequate and information provided was either inaccurate or incomplete,” Ford Motor Australia president Graeme Whickman said in a statement. “We let our customers down and for that we are sorry.”
COST-CUTTING
Separately, Ford is sharpening its knives to cleave another US$11.5 billion from spending plans and cut several sedans, including the Fusion and Taurus, from its lineup to more quickly reach an elusive profit target.
The automaker expects to save US$25.5 billion by 2022, chief financial officer Bob Shanks told reporters on Wednesday, as Ford reported first-quarter earnings per share and revenue that beat estimates.
The company now expects profit margin to reach 8 percent by 2020, two years ahead of schedule.
Additional reporting by Bloomberg
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