Ford knew about Focus, Fiesta problem but sold them anyway
The carmaker says that it’s not a safety problem if your car slips into neutral on the highway.
FORD MOTOR COMPANY
GENERAL MOTORS COMPANY
TOYOTA MOTOR CORPORATION
Magna International Inc.
Ford Motor Co. knowingly launched two low-priced, fuel-efficient cars with defective transmissions and continued selling the troubled Focus and Fiesta despite thousands of complaints and an avalanche of repairs, a Free Press investigation found.
The cars, many of which randomly lose power on freeways and have unexpectedly bolted into intersections, were put on sale in 2010-11 as the nation emerged from the Great Recession. At least 1.5 million remain on the road and continue to torment their owners — and Ford.
The automaker pushed past company lawyers’ early safety questions and a veteran development engineer’s warning that the cars weren’t roadworthy, internal emails and documents show. Ford then declined, after the depth of the problem was obvious, to make an expensive change in the transmission technology.
Instead, the company kept trying to find a fix for the faulty transmission for five years while complaints and costs piled up. In the interim, Ford officials prepared talking points for dealers to tell customers that the cars operated normally when, in fact, internal documents are peppered with safety concerns and descriptions of the defects.
The automaker faces thousands of angry customers, including former loyalists who say they will never buy another Ford; hundreds of millions in repair costs, many times without actually fixing the cars; and litigation so serious the company this spring warned investors of the financial threat posed by defects in what Ford called its DPS6 transmission.
FREE PRESS INVESTIGATION: OUT OF GEAR
Apart from the legal risks, “Total quality related spending for DPS6 could reach $3 billion,” read a 2016 internal report that projected the costs through 2020.
In a statement Wednesday to the Free Press, Ford said conversations during development about “challenges common to innovative new technology” were “normal exchanges.” It said many customers were unaccustomed to the feel of the transmission and acknowledged that, “After the new transmission was on the road, other problems developed. We acted quickly and determinedly to investigate the problems. … While we eventually resolved the quality issues, the solutions were more complex and took longer than we expected. We regret the inconvenience and frustration that caused some consumers.” It acknowledged discussion of switching to a different transmission and said it made choices based on what it thought “best for customers.”
To understand what happened, the Free Press reviewed hundreds of pages of internal documents, emails and court filings from the past decade in which Ford engineers and managers discussed concerns and sought to control damage from the dual-clutch transmission, which enabled the company to tout gas mileage near 40 mpg on the highway.
Related video: Woman discusses problems with her Ford Focus
No longer rich on oil, Alaska may slash cash to colleges
Alaska’s higher education system could see layoffs and programs cuts, thanks to a dramatic slash in money it gets from the state.USA TODAY
Does Colorado have the No. 1 economy in the country?
2020 presidential hopeful and former Colorado Gov. John Hickenlooper claimed his state had the best economy for three consecutive years.The Washington Post
A 5-year bull market ahead?
Outlook for stocksFox Business
The Free Press also analyzed consumer complaints to federal safety officials, finding accounts of 50 previously unreported injuries amid more than 4,300 entries about the unreliable transmissions. No deaths are publicly known to have been linked to the defect.
Ford’s position has consistently been that even if the cars slip out of gear while people are driving and they must coast to the side of the road, the cars don’t pose a safety risk because power steering, brakes, passenger restraints and other functions continue to work. Its statement to the Free Press for this story reiterated that “vehicles in which DPS6 was installed were and remain safe.”
Others believe the cars are dangerous, including thousands of vehicle owners, a leading consumer safety advocate and a longtime former Ford quality engineer who spoke to the Free Press. Federal regulators in 2014 conferred with Ford and declined to launch a formal investigation or order a recall of the transmissions.
Internal discussions persisted at Ford for years, at times becoming heated. Consumer blowback came quickly, with the first complaints about the transmissions filed with the National Highway Traffic Safety Administration within months of the 2011 Fiesta going on sale. That model year Fiesta was the first vehicle with the DPS6, hitting the market in March 2010, followed by the 2012 Focus, which reached dealerships in March 2011.
Lawsuits on behalf of U.S. owners allege the company defrauded buyers. Ford denies the allegations, but made headlines after settling claims in Australia and Thailand.
A high-level, confidential analysis by Ford in 2012 acknowledged rushing the cars to production, taking shortcuts to save money and apparently compromising quality protocols instituted with fanfare by then-CEO Alan Mulally. That review, obtained by the Free Press, also said the transmissions would be phased out and a different technology used going forward, but that didn’t happen. The Focus went out of production after the 2018 model year; the 2019 Fiesta is the last of the line.
By the time of the 2012 review, which was labeled “Lessons Learned,” Ford had sold more than half a million of the cars.
“There is no fix at this time,” system testing engineer Tom Hamm wrote separately in an October 2012 email to four colleagues. “We have a task force working on the issue but they haven’t identified any fixes at this time.”
Among the documents the Free Press obtained is a presentation in which Ford told NHTSA’s Office of Defects Investigations in 2014 that the problems occurred as vehicles aged. That contradicts internal emails, hundreds of consumer complaints about problems in both new and older cars, and an affidavit in 2018 by Ford’s North American powertrain quality manager saying part of the issue was with transmissions “not yet broken in.” The official also said in the affidavit that Ford learned of the problem in 2011.
But on Aug. 31, 2010, just six months before the 2012 Focus hit the market, product development engineer Tom Langeland emailed colleagues and supervisors describing “nasty launch judder” — intense vibration from a stop — that “did not clear up after many miles of driving.”
“We also cannot achieve a driveable calibration that will get us to production,” he wrote. “The clutch torque delivery MUST BE IMPROVED.”
T-boned in Saginaw
Fourteen months later, a Saginaw driver in a 2012 Focus that had been driven only 500 miles reported this to federal safety authorities: “I was stopped at a parking lot exit waiting to enter a thoroughfare, engine idling, with my foot lightly on the brake. Suddenly, the car accelerated forward, into the traffic lane, as though someone had pressed the accelerator pedal to the floor. I took a 45 mph T-bone on my driver’s side door.”
The driver reported that his “elderly wife suffered a severe heart bruising from the seat belt” and that he figured he was saved by the air bag.
Dozens of owners from throughout the country reached out to the Free Press to share their experiences:
“What is it going to take? Does someone have to die before they get these cars fixed?” asked Carrie Armstrong, 42, of Hendersonville, Tennessee. “When I am on the interstate and almost get hit by a diesel truck just because my car will not accelerate and get into gear? I put my life in danger every day I get behind the wheel of this car just to go to work.”
She said she has taken her 2015 Focus to the dealership 10 times for repair. “I bought it new and it started acting up on me two months after I bought it. I thought, ‘I shouldn’t be having these transmission issues right now.’ ”
She added: “I’ve got a $5,000 car note left. It’s almost paid off. I’ve owned a Ford Escort, a Ford Explorer, a Ford Fusion and several Mustangs. I’ve put my trust in this company.”
Armstrong’s repeated repairs are a common experience: Ford’s internal 2016 DPS6 update, marked “SECRET” on each page, notes that 350,000 of the cars “have already reached 3+ repairs in US.”
Lillian Karamanian, a retired clothing store owner from Troy, got rid of her 2011 Fiesta shortly after taking it for a repair. “I wanted to know if I would notice a difference on the surging, hesitation and lack of power. The response was that it would take at least 500 miles of aggressive driving in order to break in the fix and be able to notice a difference. I did everything I was supposed to do and nothing changed. It never got fixed. I kept thinking ‘this is crazy.’”
Kyle McIlmurray, 30, a journalist from Grand Rapids, said his family has always been loyal to Ford. He bought his 2015 Focus new and started seeing transmission symptoms immediately. “I’m pressing on the gas, it’s not going. It’s sputtering. Eventually, it will catch for a rather rough acceleration. Thankfully, I’ve had no serious issues on the road. Sometimes it feels like the car isn’t gonna go, (or) the car is accelerating way faster than I want it to go.”
Legal filings representing current and former owners claim that their 2012-16 Focus and 2011-16 Fiesta cars were prone to “shuddering, slipping, bucking, jerking, hesitation while changing gears, premature internal wear, delays in downshifting and, in some cases, sudden or delayed acceleration.”
Many owners, in their NHTSA complaints, pleaded with regulators to recall the cars.
The 2012-16 Focus and 2011-16 Fiesta equipped with the DPS6 have been the subject of 18 recalls for a range of defects, but none for transmission repair.
Ford has conducted customer service programs for updates and replacement parts and has extended the warranty on the transmissions. By late 2016, Ford documents show, “technical fixes to the Control Module and Clutch are in production and available for both vehicle assembly and service,” but supply of the parts was thousands short of what was needed for replacement. Some owners have gotten new DPS6 transmissions under warranty that have not solved the problems.
Many within Ford foresaw the problems, according to materials obtained by the Free Press, which included 41 lawsuit exhibits filed in customer litigation. Thirty-one exhibits in that set of lawsuits remain out of public view.
Ford’s lawyers argued against making the documents public early this year, saying, in part, “In fact, the 72 documents that … Plaintiffs propose to file highlight the fundamental deficiency in their Complaint: like the Complaint, these documents merely show that Ford — both before and after Plaintiffs purchased their vehicles — identified and addressed various issues of varying significance with the transmission.”
The documents show that Ford lawyers told engineers in 2008 they were worried about the safety of the dual-clutch technology, which had encountered problems during early use by Volkswagen in Europe.
Ford would be putting this transmission into low-priced, high-volume vehicles for the first time. Corporate lawyers maintained, as noted repeatedly in emails by engineers obtained by the Free Press, that the transmissions’ tendency to slip out of gear, if combined with other conditions, would result in a “Severity 10” rating. That’s the worst possible rating under global engineering protocols designed to minimize risk and comply with Federal Motor Vehicle Safety Standards set by the U.S. government.
The cars and transmission technology were critical to Ford at the time. The vehicles were developed as the company lost more than $30 billion from 2006-08.
The coming recession would send General Motors and Chrysler to bankruptcy in 2009, with Ford surviving thanks to a $23 billion line of credit secured in late 2006, in Mulally’s early months as CEO. But Ford was hardly out of the woods. Sales of its cash cow, the F-Series pickup, had plummeted as gas prices surged and construction activity froze. Mulally told lenders he would cut costs and boost development of the fuel-efficient cars Americans needed at the time.
A new presidential administration also turned up the pressure on all automakers, including Ford, to make their entire fleets more fuel-efficient. Before the new Fiesta and Focus would go to dealers, recently inaugurated President Barack Obama in May 2009 announced aggressive fuel-economy standards to require automakers to hit an average across their fleets of 35.5 mpg in 2016.
Ford promoted the DPS6 as offering the fuel economy and acceleration of a manual transmission with the operational ease of an automatic.
“With gasoline already more than $4 per gallon in some American cities, the new fuel-saving dual dry-clutch Ford PowerShift six-speed automatic is the right transmission at the right time,” a March 2011 news release said as the new Focus went to dealers.
Program calibration manager George Herr, who responded with concern to Langeland’s email six months earlier that “we … cannot achieve a driveable calibration,” was quoted in the news release praising the technology, as was Piero Aversa, the program engineering manager, who was copied on Herr’s follow-ups.
10 years of secrets
Responding to lawyers’ concerns as the transmission was being developed, Ford quality supervisor Johann Kirchhoffer wrote in an email on June 27, 2008, that stalling “alone is not hazardous.”
“We have evidence that VW had a recall of a number of transmissions with a potential ‘Unintended Neutral’ occurring with low volumes,” he continued. “We are pursuing any effort to reduce the occurrence of an ‘Unintended Neutral’ event to a so-called ‘Broadly Acceptable level.’”
“Unintended neutral” refers to the transmission slipping out of gear.
While lawyers acknowledged that the engineers might be able to reduce the defect’s severity rating, the legal “team has evidence that this event is customer safety critical and should be rated as an SEV 10 event losing power entirely,” Kirchhoffer wrote.
He did acknowledge that a no-warning “Neutral Event including an Engine Stall is hazardous with respect to customer perception.”
On Oct. 3, 2008, Ford engineer Greg Goodall wrote that a Severity 10 rating was “supported” by the Ford office of general counsel, vehicle safety and quality technical specialists.
“Items are rated Severity 10 because no mechanism exists for customer warning prior to failure,” said the internal report, written 17 months before the release of the 2011 Fiesta.
Goodall’s document proposed a technical solution, but it’s unclear from the documents available to the Free Press if the plan was used or how Ford resolved the legal questions. The coming years would show, though, that the so-called neutral events were not fixed.
A month before the Focus went to dealers, Craig Renneker, then acting director of transmission and driveline engineering, emailed Richard Bonifas, a customer service manager at the Michigan Assembly Plant in Wayne, where the cars were being built.
“The 2012 Focus vehicles equipped with the DPS6 transmission may experience a shudder/shake on start up or when slowing to a stop … ship the vehicles to the dealers with the level of shudder we currently have and continue our efforts towards a permanent resolution ASAP,” Renneker wrote on Feb. 21, 2011. “That’s just my opinion and it’s not a popular one.”
But that’s what happened — and problems became immediately apparent. While problems had been reported with the 2011 Fiesta, they mushroomed with release of the Focus, which was more than 300 pounds heavier than the Fiesta and demanded more of the transmission.
Buyers started flooding dealership repair departments, complaints hit the NHTSA website and Consumer Reports in October 2011 lowered Ford’s reliability rating, in part because of the transmission.
“Ford’s drop can also be attributed to problems with new technologies … and the new automated-manual transmission used in the Fiesta and Focus,” the magazine said.
Mulally’s quality system
Ford was supposed to have a system in place to protect against such problems.
Mulally, who said he would benchmark Ford against Toyota, started a simple red-yellow-green system to boost the company’s quality. He earned media attention for using the system as part of his weekly management meetings to illustrate the status of projects. A green light meant things were on track; a yellow light indicated caution with a plan in place; a red light indicated a critical situation with corrective action needed.
At first, his direct reports suggested more green lights than he thought plausible, and as time went on, yellow and red lights emerged. The tactic, Mulally said at the time, was meant to foster candor and collaboration in place of competition and jockeying for promotion — and improve quality.
But the 2012 “Lessons Learned” review found that during development of the Fiesta, delayed decisions required engineers to work under compressed schedules, and they failed to meet a series of milestones. That led to late identification of noise, vibration, launch judder and “shift quality issues” that resulted in development of faulty hardware and software.
The review is attributed to top engineering and development officers, including Raj Nair, who was head of global product development and chief technical officer. He later ascended to president of Ford North America before leaving the company.
“What is the cost of poor quality?” is the title of a page in the internal report, which notes “significant” action is required to “get to competitive quality levels.” An accompanying chart notes that the 2011 Focus — before use of the DPS6 — had 23 unhappy customers per 1,000 surveyed while the new 2012 Focus had 266 unhappy customers per 1,000 — after just three months of ownership.
The report noted “trade-offs” of performance in favor of cost and fuel economy. It said use of a dry clutch rather than a wet clutch led to harsh shifting and other issues.
The DPS6 is different from the automatic transmissions most people are used to, but it operates the same way: Shift to Drive or Reverse and go.
The guts of a dual-clutch transmission like the DPS6 are more like a manual than a conventional automatic transmission, but the driver does not have to shift gears. These transmissions can improve fuel economy and weigh less than a conventional automatic, key reasons Ford developed the DPS6.
The technology is widely used today, often by luxury brands and sports cars such as Porsche. There are two kinds of dual-clutch transmissions: wet-clutch and dry-clutch. The difference is whether oil lubricates the clutches. The DPS6 was a dry-clutch design, which leads to higher temperatures and potential performance problems, engineers say.
Ford’s 2012 review showed that things went south from the start. The transmission architecture was selected 12 months later than normal — “limiting up-front engineering development time, resulting in ‘open’ deliverables at key program milestones,” the report said, citing compression of program approval, prototype verification, launch readiness and mass production.
“At each early checkpoint, it became more apparent” that the transmission systems for the 2011 Fiesta program “were not capable to meet customer expectations,” the review said.
A page was devoted to milestone failures with 23 “red” alert issues related to calibration and “115 software changes required before launch” for the 2011 Fiesta.
The memo noted that as the project headed toward launch, “issues increased rather than declined.”
The 2012 report also said upgrades to the dual-clutch system “will not be pursued,” because of an agreement to change technology made that October.
However, the report says alternatives would delay launch of future model years, add production and factory costs and reduce fuel economy, creating the risk Ford could run afoul of federal mpg requirements.
The change was not made, and Ford for years continued tweaking the DPS6, adjusting calibration, clutch materials and fixing a seal leak. Documents show that parts ran in short supply in late 2016 for the latest fix at that time.
‘1-800 snitch line’
At issue, a quality control engineer with years of experience at Ford told the Free Press, was the high cost of substituting a different transmission in low-cost vehicles with a thin profit margin.
Upper management was not informed of the unfolding crisis at the start in order to contain liability, said the engineer, who worked with Ford colleagues in 2010 trying to troubleshoot the situation. “People tried not to overly communicate how big the problems were.”
The engineer, who no longer works at Ford and requested anonymity out of concern it might jeopardize his career in the auto industry, said the company had previously identified transmission issues in high-profit trucks and disrupted everything to issue “stop ships to limit quality exposure” and fix those problems. The DPS6 transmission was treated differently.
In this case, the engineer said, design and release engineers, calibration development engineers, manufacturing engineers, customer service engineers and transmission engineers all knew the transmissions were bad but kept it quiet.
“The quality office at Ford is a separate operation from product development. They’re supposed to take issues to the top floor,” the engineer said. “These vehicles never passed the tests. Work is supposed to be complete at FEC — Final Engineering Completion. It wasn’t. The quality operating system failed. Inputs from customers were ignored. Corrective actions weren’t effective.”
He added, “Everyone was worried about getting out of the manufacturing contracts. But it could’ve been done.
“They had people complaining on launch teams, people hired to drive our vehicles. Vehicle manufacturing had been lied to by product engineering. You’re supposed to take corrective action. People did not fix the problems. They felt like it would hurt profits. They knew they had the fuel economy up and they couldn’t solve the root cause of the problem.”
He continued, “Everybody working on this project knew it had issues and they were afraid to call the 1-800 snitch line. We were all afraid to tell the truth.
“You want to know why you don’t want to do anything about it? It’s work. It comes right back at you — drop everything you’re doing, work around the clock and you’re on the hook to explain what you’re doing and the weight of the company is on your shoulders and it’s incredibly stressful and intense. You face the repercussions of publishing recovery plans and explaining three times a day to upper levels of management. You have no time to do the rest of your job and you put your Superman cape on and fix things.”
He noted that some people involved were promoted. “This DPS6 situation didn’t impact anybody’s career.”
Pull to the side
As years wore on, Ford would make the case in emails, internal documents and an affidavit that if the steering, turn signals and other power worked in the car, then the situation couldn’t be considered dangerous. In theory, people could turn on a blinker and steer to the side of the highway if the car slipped into neutral at 70 mph.
Patricia Smith, who lives in Tennessee, told the Free Press she had just that experience. In June, she said her 2013 Focus had been in the repair shop for six months. She was borrowing a car to get to her job as a store clerk; her husband works at a foundry.
“Last time I drove (the Focus), I was going down the interstate between two trucks and it feels like the car goes into neutral on the freeway. You have to pull over to the side. It’s just not dependable,” she said.
Similar incidents have led to injury accidents, according to reports to federal regulators.
- “While driving 70 mph, the vehicle stalled and lost power,” the driver of a 2015 Focus reported to a NHTSA official. “As a result, another vehicle crashed into the contact’s vehicle” on July 1, 2016, in Ladera Ranch, California. A passenger sustained a neck injury from a seat belt, and the driver reported unspecified injuries and was taken to the hospital in an ambulance, the report says.
- The Montclair, New Jersey, driver of a 2014 Focus with 1,145 miles on it reported to NHTSA: “On June 23, 2014, while traveling on the highway, the subject vehicle ‘stalled’ without warning, despite attempting to restart the vehicle, the driver was unable. The subject vehicle was struck from behind causing personal injury.”
‘They made fun of me’
For years, Ford engineers and their supervisors exchanged emails confirming that a serious problem existed with no identifiable solution.
More than a dozen consumers told the Free Press that dealership mechanics told drivers they didn’t understand how the cars work or know how to properly operate them. Customers including Liliana Van Bibber, 53, a homemaker in Coppell, Texas, said when she went back to the dealership for repair of her 2013 Fiesta, “They made fun of me.”
Christopher Myers, 31, an insurance agent from Jacksonville, Florida, said when he went to the car dealer with his 2013 Focus, “They told me I can’t drive.”
In reality, the problems had Ford’s attention.
After a 2011 Fiesta was brought to a Hempstead, New York, service department for moving forward while in reverse, veteran Ford engineers David Lemke and Tom Hamm in Livonia exchanged emails, obtained by the Free Press, that were labeled “High” importance in early May 2011: “Tom … Make the call down there ASAP … find out more details. Ford Safety Office wants to get involved.”
Hamm, as a transmission testing engineer, emailed a colleague on May 10 to keep the dealership from pulling the transmission, to “hold off on the swap,” until it can be examined. “I wouldn’t be asking if it wasn’t a safety issue.”
The Free Press interviewed more than 80 consumers from all over the country in May and June who had called the paper after a story about DPS6 litigation. Many of the drivers are working-class buyers who can’t afford more expensive cars.
Eldon Cooper, 50, of Mountain Home, Arkansas, never imagined coming home from multiple tours of duty in the Mideast and then having to fight Ford. He bought his 2013 Focus to get to Veterans Administration appointments, being medically retired after 19 years.
“I’ve waited for parts at least 63 days,” the U.S. Army veteran said in June. “Basically, we’re stuck with this car. You wouldn’t think you’d have transmission issues with a brand new car. At 34,000 miles, it had problems they never did diagnose.”
Denny Robertson, 40, of Greenville, Texas, depends on his 2013 Fiesta to get to medical appointments too. “We’re on a set income. We’ve gone through hell.” His wife, an amputee, apologized for crying during the interview. “We’re trying to get to the point that we can save a little money, but since I had open heart surgery last year we have no savings and sink a little more down each month with medication costs.”
Customers say that while repairs often are covered by warranty, they are asked to pay for diagnoses they can’t afford. Many owners told the Free Press they have given up hope for a fix after multiple attempts.
Secret crisis manual
Dealership service shops were inundated right away.
Matt Trent, a Ford transmission manager in Livonia, emailed his team Dec. 5, 2012, that 1,400 Focus vehicles had been returned to dealerships with complaints.
Ford dealerships were forwarding pages and pages and pages of reports involving the Focus and Fiesta from across the country, chronicling transmission issues and customer frustrations, some even threatening to sue trying to get action.
In July 2013, Bob Thomas Ford in Hamden, Connecticut, reported that the owner of a new Focus “loves his vehicle but just wants it to run properly.” The customer pleads for someone to stop the bucking and jerking and demands Ford do something to fix the problem. “Customer wants to know if he is expected to wait until there is a class action suit to sue Ford.”
The company in 2014 extended the warranty on transmissions in the 2010-14 Fiesta and 2012-14 Focus, and created a six-page “talking points” guide to help dealers work with customers.
“We will not proactively communicate with the press,” said the guide.
Sample questions and answers in the guide include:
- Are the affected vehicles safe to drive? Yes.
- Why don’t you see this as a safety issue? Safety recalls are necessary when a defect poses an unreasonable risk of accidents or injuries.
- Have there been any accidents or injuries due to this condition? Ford does not expect any accidents to occur as a result of this condition.
Customers also were complaining to NHTSA, giving detailed accounts involving transmission failure, replacements needed after just a few miles, accidents and warnings of potential fatalities, including reports from members of Congress on behalf of constituents.
Sen. Johnny Isakson, a Georgia Republican, noted issues with a 2012 Focus. Rep. Joe Courtney, a Connecticut Democrat, a 2012 Fiesta. Sen. Richard Burr, a North Carolina Republican, a 2013 Focus. Former Rep. John Fleming, a Louisiana Republican now assistant secretary of commerce for economic development in the Trump administration, a 2013 Fiesta. Rep. Randy Neugebauer, a Texas Republican, a 2014 Focus. And Sen. Rob Portman, an Ohio Republican, a 2016 Focus.
The company had issued several letters urging people to go to their dealerships for adjustments.
At one point, separate emails show, a Ford team’s frustration boiled over:
- “This unit will need a new trans,” wrote David Snyder, a Ford supervisor, to the chief engineer for global product development, at 12:15 p.m. April 15, 2013.
- Engineers reply that the cause of the problem, in this case grinding, has not been identified.
- “So what is the customer to do?” Snyder asks the whole team by email the next day. “We have identified that the transmission has a defect, which would require the transmission to be replaced, I believe … how is the customer issue going to be resolved? Just tell the customer to live with the issue?”
- “When will we have a fix or TSB (technical service bulletin for customers)?” asked engineer Alberto Cruz, this time copying 11 people at the company.
- Transmission engineer Hamm forwarded Cruz’s question only to product engineer John Robarge just one minute later — at 8:15 a.m. April 25: “Can you tell me smart a**?”
Internal emails show growing distress and urgency in early 2013.
“I’m tired of looking like the bad guy for repairing all these DPS6 transmissions, when truthfully Ford’s the bad guy here,” said an email sent Feb. 22, 2013, from a Jacksonville, Florida, dealership. “Let’s be honest. Ford produces a horrible product and we trans guys get the wrath of it. My warranty clerk thinks I’m insane and it’s like pulling teeth to get paid for all the work we have to do on these things. The input shaft seals are only good for about 10K miles at best. And by replacing them as well as the clutch, the car’s only going to return again and again and again. I do 4 or 5 a week on average. … I would love to know how Ford intends to fix this.”
Also in February 2013, a team of about 30 people “wholly devoted to working on the DPS6 transmission” was assembled to do a “deep dive,” working 10 hours a day, seven days a week, in Sterling Heights. The team comprised Ford engineers and personnel from the company that manufactured the transmission, Getrag, and others, according to a September 2018 affidavit from Christopher Kwasniewicz, currently North American powertrain quality manager. He was systems manager for the DPS6 from 2013-16.
‘Too many to ignore’
The Free Press documented at least 4,377 complaints to NHTSA for the 2011-16 Fiesta and 2012-16 Focus transmissions — a high number for the consumer reporting system.
For context, complaints relating to these transmissions are nearly 50% higher in a shorter time period than complaints to NHTSA of dizziness and nausea from occupants of the 2010-18 Ford Explorer, which are the subject of a federal investigation.
Many more complaints likely were filed based on transmission flaws. The Free Press analysis eliminated dozens of reports of engine stalling, even though Ford documents show that to be a DPS6 symptom, because of the possibility that the stall was related to a separate fuel system problem. Other complaints were excluded because they lacked sufficient detail to be sure they were transmission-related.
“Four thousand complaints would certainly get our attention. That’s too many to ignore,” said Jason Levine, executive director of the Center for Auto Safety, a consumer advocacy group. “Incidents involving an inability to accelerate suggests that the threat is not just to owners of these vehicles but others on the road. It suggests a callousness towards life. Fact is, unintentionally losing power on the highway can lead to crash deaths. It’s not good. It’s not safe.”
He was puzzled why the vehicles have not been recalled to fix the transmissions.
“The law is specific where you don’t need to wait for a body count,” Levine said. “It may be we don’t know of further tragedies, not that there haven’t been some.”
While Ford has maintained that the Focus and Fiesta transmission problem does not pose a safety risk, in June of this year, the company recalled 123,000 2013 F-150 trucks because of a transmission calibration issue. The vehicles had been reprogrammed as part of another recall, but the updates did not fully prevent such problems as an unintended downshift.
“Depending on vehicle speed, an abrupt transmission downshift to first gear without warning could result in loss of vehicle control, increasing the risk of a crash,” Ford’s recall notice said.
Thing is, tracking injury and death is nearly impossible under these circumstances because a police officer is never going to diagnose a transmission issue, said Levine.
Some Focus and Fiesta drivers reported neck injuries, bruised ribs and thousands of dollars in hospital bills to NHTSA. Again and again, owners wrote, “I was lucky I wasn’t killed.”
Report to regulators
In 2014, the Office of Defects Investigations at NHTSA looked at the issue.
The Free Press obtained a letter dated Nov. 19, 2014, from Steve Kenner, Ford global director of automotive safety, to Kevin Vincent, NHTSA chief counsel. It said the company a week earlier provided an overview of information related to the DPS6 transmission “in the context of the agency’s recent questions concerning 2011 through 2015 model year Ford Focus and Fiesta vehicles.”
The memo refers to an online presentation also obtained by the Free Press whose participants from Ford included a senior research engineer, internal investigations manager, global automotive safety compliance assistant director, the transmission engineering manager and transportation quality supervisor.
The presentation to federal regulators offers information that appears to downplay the nature of the defect:
- The report said the transmission issue “is a progressive condition” related to a vehicle’s age. But internal documents and NHTSA complaints show repeatedly that customers with new vehicles experienced problems.
- Ford told regulators “multiple symptoms” consistently precede “complete loss of mobility.” Customer complaints do not support that characterization, Free Press interviews and the review of NHTSA records found. Ford told NHTSA it was developing software to provide an “overt” warning. A separate document obtained by the Free Press showed in fact that two company vice presidents were seeking approval from then-CEO Mark Fields, who succeeded Mulally in 2014, to “develop and test a software strategy” that “provides early warning to customers.” The software was to be released nine months later, in August 2015. The software “will more easily satisfy NHTSA’s requirements,” the approval request noted.
The change, which was to be in place five and a half years after the first car with a DPS6 went on sale, would not remedy the transmission problems; it was intended to warn drivers when their car was about to slip into neutral. A subsequent document showed that the warning was included in a service update.
In another part of the 2014 report to regulators, Ford said its engineers installed a transmission part from a customer’s car — a “mechatronic actuation module” — in a company fleet vehicle. This is what happened:
- Event 1: Trans went to neutral at 40 mph. Coasted to a side street. Re-engaged after sitting for one or two minutes and moving the shift lever.
- Event 2: Drove 3 more miles then turned into a parking lot. Trans went to neutral while driving in the parking lot. Stopped vehicle, shifted to Park, shifter then became locked in Park. After a few minutes, was able to shift out of Park and re-engage trans.
- Event 3: Driving in the same parking lot trans went to neutral. Re-engaged after a minute or so.
- Event 4: Drove on the road for 1 mile, trans went to neutral, coasted to a parking lot. Shut engine off and waited 20 minutes without trying to restart.
- Event 5: Started engine, engine light was still on. Drove on highway, trans was shifting in and out of neutral with no movement of the shift lever. This would occur even at the stop lights. Continued to drive to interstate.
- Event 6: Drove 5 miles, entered the interstate. After several miles at 60 mph trans went to neutral, coasted to the shoulder, stayed in neutral. Shifted to Park, turned engine off, immediately restarted and re-engaged.
- Event 7: Drove a couple more miles and exited the interstate. On the exit ramp trans went to neutral, stayed in neutral. Shifted to Park, turned engine off, restarted and re-engaged. Drove back to the Ford parking lot.
Ford’s presentation highlighted that, despite the many problems, “mobility was consistently regained.”
In response to “Customer complaints of ‘no starts,’ ‘loss of gears’ and ‘loss of motion,’” the bottom of a page in the report notes: “Engine continues to run, power steering, power brake assist, electrical and restraint systems remain operational.”
Ford on Tuesday, in response to the Free Press asking whether a car losing acceleration is a safety problem, replied, “You should contact NHTSA. They quite regularly issue safety recalls. … They have looked at this issue quite thoroughly and have not (issued a recall) in this case. Nor have governing bodies in other markets.”
In response to a Free Press inquiry about Fiesta and Focus transmissions, NHTSA said in June that it “conducted a pre-investigative review of the relevant information in 2014 and elected not to open an investigation. The agency has monitored the situation since that time.”
$3 billion headache
Behind the scenes, things continued to worsen for Ford.
“While OGC (Ford’s office of general counsel) is resolving class actions, risks from consumer claims and regulatory investigations are growing,” said the “SECRET” December 2016 report from Bennie Fowler, group vice president of quality and new model launch, and Jim Vanslambrouck, a quality director. “Government agencies are investigating Ford for potential consumer fraud and whether the symptoms pose a safety concern.”
Spending for the transmission “could reach $3 billion, including $1.1 billion approved to address customer satisfaction,” the December 2016 “DPS6 Update” said.
Ford devoted a page in the report to “litigation and government investigations,” noting that “consumer litigation is increasing in all regions.”
Pending U.S. lawsuits include:
- A class-action case based in federal court in Los Angeles covering 1.9 million owners and former owners. In these cases, members of the certified class are treated the same in each state and certain claims are capped according to the terms of the settlement. A $35 million settlement is under appeal in this case, with a consumer group arguing it’s a bad deal for owners. Opponents point out that an estimated 94% of the vehicles’ owners will not qualify for relief based on negotiated conditions.
- A Michigan-based “mass action” filed in Wayne County District Court brought by 12,300 buyers who have opted out of the class action. In a mass action, the cases are combined, but each plaintiff must prove certain facts and can win individual damages that are not capped.
- About 970 individual lawsuits from across the country bundled together in federal court in Los Angeles. Dozens of these have been settled recently by Ford.
- About 110 coordinated lawsuits from across the country are bundled together in California Superior Court. Dozens of these also have been settled recently.
Lawyers who have negotiated with Ford say the company has offered settlements of more than $75,000 to individual plaintiffs in California, which is known for its strong consumer protection laws. They note Ford has lost its only trial to date on the matter in California, with a judgment of more than $700,000. The company conceded liability of more than $145,000 in damages, but challenged a fraud claim and lost.
Overseas, Ford paid a fine of $10 million ($7.6 million U.S.) to the Australian government for the “unconscionable” mistreatment of consumers blamed as bad drivers when they complained of transmission issues.
“Ford knew 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,” Rod Sims, Australian Competition and Consumer Commission chairman, said in April 2016.
That case involved about 10,500 customer complaints over Focus, Fiesta and some EcoSport models made from 2011-15 with DPS6 transmission.
Ford acknowledged that it “took too long to identify the issues” because the company was “overwhelmed with the volume of complaints.”
Then in September 2018, the South Bangkok Civil Court handed down the first Thai class-action ruling of its kind, ordering Ford to pay 23 million baht (about $746,000 U.S.) to compensate 291 owners of Focus and Fiesta vehicles with defective transmissions, plus legal fees and other costs.
Fields ordered to testify
In April, lawyers for Fiesta and Focus owners in the Los Angeles-based litigation subpoenaed the deposition of former CEO Fields. His lawyers tried to block the testimony.
But U.S. Magistrate Judge Alicia Otazo-Reyes in Florida, where Fields lives, ordered in June that he be deposed. Plaintiffs contend he played a key role in what they allege was a cover-up and was a primary decision maker who attended crucial meetings and was involved in negotiations with Ford’s supplier, in which Ford claimed the transmission was defective.
“Mark Fields is being deposed in our case because during the time he was head of the company, Ford concealed dangerous safety defects in Focus and Fiesta autos equipped with the DPS6 PowerShift Transmission that Ford could not fix,” said Michael Resnick, who is representing hundreds of car owners in California and is co-counsel in the Michigan case.
Fields, who was president of Ford’s Americas division when the Focus and Fiesta were developed, now is a senior adviser with the industrials team at TPG Capital, a global private equity firm. He is scheduled to testify in late July. An attorney for Fields did not respond to messages from the Free Press seeking comment.
The Free Press investigation could not determine whether Mulally, CEO from 2006-14, was directly involved in any of these decisions. Ford is fighting to keep confidential internal documents that plaintiffs’ lawyers believe could include Mulally. None of the documents or lawsuits available to the Free Press indicates when the board of directors was briefed about the transmissions or whether board members were involved in decisions to move ahead despite concerns.
Now, the ongoing issues are among the challenges facing CEO Jim Hackett, who took the helm in 2017 with Fields’ departure.
‘Ford’s silly stupid rules’
While Ford was telling owners, prospective buyers, dealers, and domestic and foreign governmental agencies that transmission issues were “normal,” behind the scenes the company was fighting the supplier that manufactured the transmission.
On March 20, 2014, senior purchasing manager Thomas Miller wrote, “Our involvement is one focused only on manufacturing of the DPS6, not the design. Getrag … owns the design and Ford is not allowed to even have the component drawings for the DPS6. As Ford believes strongly this is a design failure, Getrag should reimburse Ford for 100% … we need to be clear where the responsibility lies.”
In the 2016 DPS6 update, Fowler, the VP of quality and new model launch, noted that a “seal and clutch settlement” with Getrag involved a $50 million payment that released the German supplier from claims as well as a $250 million maximum payout over 10 years related to a settlement among Ford, Getrag and another supplier. Getrag, now owned by Canada-based supplier Magna International after a bankruptcy, continues to have a 50-50 joint venture with Ford known as Getrag Ford Transmissions.
Meanwhile, internal emails show that dealers tangled with Ford headquarters in September 2016, challenging whether the company was exercising good faith and expressed frustration over endless repairs. Dealers sent tech feedback to Ford service engineer Jeremiah Cannon:
“I follow Ford’s silly stupid rules and when it comes back it’s on Ford,” wrote a tech. “When I get those stupid reprogram (technical service bulletins), I reprogram it and ship it, I don’t care if it’s fixed or not. Ford doesn’t want to spend money on proper verification of concern and verify concern was resolved and well I damn sure won’t spend my money or time to do it for them. NOT MY JOB.”
Year after year, hundreds of millions of dollars are spent on repair costs that eat into Ford profits.
So it’s no surprise that Ford urged its team to cut costs associated with expensive warranty repairs.
“We are working to reduce our warranty spend for the DPS6. As we look to every area to contribute, we should continue to challenge ourselves … to reduce the billable labor hours,” Renneker, the acting transmission and driveline engineering chief, wrote on Aug. 30, 2016.
That idea alarmed service engineer Cannon.
“We ALWAYS look to skin the folks who are doing the repair as a way to save money due to a flawed component. … we are looking at a systemic issue that is only going to get worse.”
Renneker replied later the same day: “I have to present to Bennie Fowler early next month on the steps we can take to reduce the — $700M warranty bill coming to us for DPS6.”
Two years earlier, Fowler had complained about repair costs in an email to powertrain purchasing and customer service managers. “Team, we will need your help to improve our fourth-quarter performance … everyone is getting rich off the dps6. This has cost us 3 dollars per share in stock price.”
‘It’s a bad deal’
In April 2019, Ford warned shareholders of legal exposure in a Securities and Exchange Commission filing. “We are currently a defendant in significant number of litigation matters relating to the performance of vehicles equipped with DPS6 transmissions,” said the last item on a 70-page document dated April 25 and signed by Cathy O’Callaghan, Ford vice president and controller. “We are a defendant in numerous actions in state and federal courts alleging damages based on state and federal consumer protection laws and breach of warranty obligations. Remedies under these statutes may include repurchase, civil penalties and plaintiff’s attorney fees. In some cases, plaintiffs also include an allegation of fraud.”
Ford and its customers are watching the U.S. Court of Appeals for a decision any day on whether the $35 million settlement in the class-action suit will survive a challenge by a consumer group that argued the amount is unfair. The proposed settlement caps cash payments at $2,325 per class member.
“It’s a bad deal,” said Michael Kirkpatrick, an attorney for the nonprofit Public Citizen consumer advocacy group based in Washington, D.C., which intervened as an independent third party for free.
“I don’t have access to what Ford knew or when they knew it,” he told the Free Press in June. “There is strong evidence that Ford knew of a defect and covered it up and continued to sell the vehicle. That’s the allegation in the class-action complaint, and that’s why we think the relief is inadequate. Not just a defect that manifested itself after sale, and the manufacturer had no reason to know and an obligation to just fix it. It’s a much more valuable case because of the fraud.”
Ford told the Free Press on May 9, regarding the proposed class-action settlement, “Ford is committed to providing our customers with top-quality vehicles. We continue to deny the allegations in this lawsuit but rather than continuing with the litigation, Ford entered into a settlement agreement with lawyers representing these plaintiffs. That settlement is fair and appropriate and we look forward to final court approval.”
If the pending class-action settlement is thrown out, Ford will be forced to restart negotiations or risk trial. If that happens, attorneys have said, Ford faces a potential $4 billion liability. And consumers who didn’t know about the case when it started years ago may become aware of the litigation and bring individual lawsuits.
On Sept. 5, 2018, Kwasniewicz, the North American power train quality manager, signed an affidavit in the Michigan mass action that said he was systems manager for the DPS6 transmission from 2013-16. Among his statements:
- “In 2011, in the very early days of production of DPS6-equipped Focuses, Ford became aware of an issue pertaining to green clutches in DPS6 transmissions. Specifically, Ford became aware that clutches in DPS6 transmissions that were ‘green,’ or not yet broken in, were exhibiting rattle noises and first gear judder.”
- “After the launch of DPS6-equipped vehicles, Ford at times had difficulty determining whether some symptoms being complained of were caused by the transmission’s normal operation or by a quality issue or both,” he said.
Kwasniewicz also said, “After the vehicles accumulated even more mileage, beginning around 2014, customers reported concerns with transmission function, including intermittent starting problems, lack of power … and intermittent concerns of loss of transmission engagement while driving.”
Ford’s internal documents and NHTSA complaints show that many DPS6-equipped vehicles exhibited problems immediately.
Kwasniewicz also repeated Ford’s contention that the transmission troubles aren’t dangerous.
“The DPS6 transmission has not demonstrated any pattern of safety-related failures, and Ford concluded that none of the quality issues associated with the PowerShift transmission pose a safety concern,” the affidavit said.
‘I’m fighting back tears’
Fiesta and Focus owners watch and hope for the best.
Michelle Hughes, 43, of Flint bought her 2012 Fiesta new to drive to work at a Saginaw hospital, where she cleans and sterilizes surgical instruments.
“I loved my car, but the last two years, the transmission malfunction light has come on over and over again. I don’t have the money to go and have it looked at. You’re at a stop light and you push on the gas, sometimes it won’t go. You have to literally hold the gas down. But when the car finally goes, it’s like a rocket taking off. I only drive it if I have no other choice, or can’t find a ride to work. I don’t drive it on the expressway anymore. Now it overheats on top of everything else.”
She continued, “The lady asked what Ford could do to help me and I said I wanted them to just buy back my car or give me a different car. I don’t need anything fancy. Just dependable, so I can get to work and take care of my family. It’s OK for me to drive myself in a car I don’t feel safe in, but I don’t want my kids in that car. I’m fighting back tears, it’s overwhelming. I can lay down and I can cry or I can keep going. I’ll be damned if I’m going to let Ford get the best of me. But I bought my car brand new and paid cash with no financing. My mom passed away and I used the money she left me.”
Ken Stern, the Novi-based lawyer handling the mass action case, said consumers feel betrayed.
“We’re witnessing a corporation overwhelmed by greed and, in its lust for a favorable balance sheet and profits, willing to lie and to abuse their loyal customers,” he said.
Why, some people wonder, have so many people reported problems while many have not. The engineer who attended months of early crisis resolution meetings when the Fiesta and Focus were first launched said that young drivers and people who have driven mostly used cars simply don’t recognize the transmission problems for what they are. Some cars have not exhibited the worst of the symptoms, and some irregularities are accepted as normal.
Until they’re not.
“They’re nice little cars and they get good gas mileage,” said Jamie Booth, 51, of Mio who bought a used 2012 Focus last year to go to work as a caregiver for people with disabilities. Her daughter saved up for a 2012 Focus to commute to classes at Michigan State University in Lansing.
“I didn’t realize my daughter Shelby was having issues with her transmission,” Booth said. “She didn’t realize what it was, that it was not accelerating like it should. Then she drove my car and said it does the same thing.
“When you go to accelerate, it feels like the tires are spinning but they’re not moving. … Honestly, I thought it was traction control. Like it was happening on ice. But now it’s still doing it in the summer. When I brought it to the Ford dealer, they said not to worry, it’s fine,” Booth told the Free Press.
The noise under the hood in her car was so loud that Booth thought “it almost sounded like something alive in the front of the car was trying to get out. The car wouldn’t start. We had a towing company get it. The transmission guy said he drove it 10 miles no problem and parked it. The next morning it wouldn’t start. The closest repair shop is almost two hours south of me. And my 23-year-old daughter is on I-96. The transmission is unpredictable but the dealer says everything is perfectly fine.”
She said they “put a new ‘brain’ in my daughter’s car that cost us $1,100.”
Ryan Karczeweki, 34, a business intelligence analyst from Royal Oak, said he’s getting ready to replace his clutch for the third time on a 2014 Focus. It would likely be more but he just can’t go to the dealership repair shop as much as needed.
“I commute from home to Detroit for work. The engine starts sputtering,” he said. “I just want to pay off the car as quick as possible — I owe $9,200 — and get a new car. It is the focal point of my financial life, the top priority. This car has been a disaster, pretty much.”
From launch to lawsuits: how it happened
June-October 2008: Engineers’ emails show that Ford lawyers are concerned about safety.
Before March 2010: As the 2011 Fiesta moved toward launch, transmission “issues increased rather than declined.”
Aug. 31, 2010: Engineer Tom Langeland emails a program boss and others six months before launch of 2012 Focus saying “we cannot achieve a driveable calibration.”
Oct. 29, 2010: First of what would be more than 4,300 complaints to NHTSA about the DPS6.
February 2011: Transmission and driveline director tells factory he wants to ship the vehicles to dealers and continue working on a solution to defects.
March 14, 2011: 2012 Focus goes to dealerships; news release calls it the “right transmission at the right time.”
August 2012: High-level review finds “At each early checkpoint, it became more apparent” that the transmission systems “were not capable to meet customer expectations.”
August 2012: Separately, an engineer emails “We have no fix.”
Oct. 13, 2014: VP of Quality Bennie Fowler says the transmission “has cost us 3 dollars per share in the stock price.”
November 2014: Federal regulators get a web presentation from Ford on DPS6 defects. They decline to order a recall.
December 2016: Ford report says 350,000 of the affected vehicles “have already reached 3+ repairs in US.”
December 2016: Ford expects costs from the DPS6 flaws to be $3 billion.
Contact Phoebe Wall Howard: 313-222-6512 or email@example.com. Follow her on Twitter @phoebesaid. Senior content director Randy Essex and auto critic and product specialist Mark Phelan contributed to this report. Read more on autos and sign up for our autos newsletter.
This article originally appeared on Detroit Free Press: Ford knew Focus, Fiesta had flawed transmission, sold them anyway
Source : Link