Ford Motor Co. could pay out more than $100 million as part of a settlement the automaker reached with owners of Ford Focus and Fiesta vehicles as a result of repairs to faulty dual clutch transmissions.
The deal to satisfy a class-action suit by nearly 2 million owners and former owners of the vehicles with the DPS6 transmission was filed as part of court documents filed late Friday, according to the Detroit Free Press.
The deal requires Ford to pay at least $30 million to resolve the issue, but since there is no cap on the deal, the payout could approach or even exceed $100 million. The amount, or potential amount, is large enough that Ford warned shareholders about it in a filing with the Securities and Exchange Commission in April.
“There’s no cap. The truth is, Ford is going to have to pay out claims until they’re exhausted,” Tarek Zohdy of Capstone Law in Los Angeles, told the Free Press, which covered the issue extensively. “In my opinion, Ford will have to deal with these vehicles until people are done filing their claims.”
The two sides have been working to hammer out an agreement on the lawsuit, which was filed in 2012. The company extended the warranties on many – 560,000 – of the affected vehicles last year.
“Ford believes the settlement is fair and reasonable, and we anticipate it w
ill be approved by the court following the hearing next month,” Ford spokesman T.R. Reid told the Free Press.
The proposed agreement in U.S. District Court for the Central District of California improves on an earlier version that an appeals court declined to accept in September. Improvements include:
- A guaranteed commitment from Ford of $30 million in cash reimbursement to consumers who have a record of multiple failed transmission repairs within five years of buying their cars or 60,000 miles
- An easier process for former owners and people who leased the cars to get compensated
- Simplifying a buyback program for defective vehicles
Entry-level Fiesta and Focus vehicles, built during the last decade, have a history of needing repairs for transmissions and other issues. The lawsuit alleges Ford lied about the problematic transmissions in hoped of simply getting rid of them to buyers and then blaming the drivers for problems they experienced.
Ford customers claimed in legal filings their 2012-16 Focus and 2011-16 Fiesta compact cars were built with transmissions prone to “shuddering, slipping, bucking, jerking, hesitation while changing gears, premature internal wear, delays in downshifting and, in some cases, sudden or delayed acceleration.”
The automaker, according to the filing, has already repurchased 2,666 vehicles at a cost of more than $47 million with the faulty transmissions.