Ford SA made to pay up for Kuga combustion
THE National Consumer Commission (NCC) has reached a settlement agreement with Ford South Africa over the Kuga engine fiasco, which saw 56 Ford Kuga 1.6 Ecoboosts burst into flames.
On Friday, the commission announced that Ford would be fined R35 million and consumers will have the option of taking a settlement payout, entering into mediation or taking the matter to court.
It found the company in contravention of Consumer Protection Act (CPA), but said it was not negligent.
The consumer commission had launched an investigation into Ford Motor Company of Southern Africa’s (FMCSA) conduct in 2017, after being alarmed by the number of complaints about burning Kugas on our roads. It had received 160 complaints from consumers, whose cars had burst into flames spontaneously. The first reports of cars burning while being driven or even parked started coming at the end of 2016.
Acting NCC commissioner Thezi Mabuza said: “Our investigation into these allegations confirmed that Ford had engaged in prohibited conduct by distributing Ford Kuga vehicles that failed/could have failed as a result of a cooling system failure. This meant that the failure of the cooling system rendered the vehicles not suitable for the purpose for which they were generally intended and this resulted in the vehicles being unsafe at the time of the fires.”
In terms of the agreement reached between the parties, Ford SA will be fined R35m.
The affected owners have now been presented with three options: to accept a R50 000 payout for indeterminate losses, as full and final settlement; submitting a claim against Ford in terms of Section 61 of the CPA, through alternate dispute resolution, paid for by Ford; or, consumers can take the motor company to court.
Civil claims, though, will be for consumers’ own pockets.
The NCC announced that consumers who want more than the R50 000 compensation – and can prove that they had suffered losses during a Kuga fire – may submit claims against Ford SA in terms of Section 61 of the CPA, as part of the alternative dispute resolution (ADR) process.
The R50 000 compensation is intended to cover replacement of possessions that might have been lost in the fires. Advocate Terry Motau has been appointed as mediator.
The Kuga fiasco caused the motoring giant considerable reputational damage, compounded by its poor handling of the crisis, which included being forced by the NCC to issue a maintenance recall.
There were also reports in the US, Australia and New Zealand due to engine issues. The Kuga is known as the Ford Escape in the US. It recalled around 400 000 of those in 2016 before any injuries were reported.
In South Africa, Ford has already spent over R336m on the phased Kuga recall, which included R112m on courtesy cars, R142m in extended warranties, R78m for trade-in assistance, R1.5m in call centre support, and R2.5m in filling fuel tanks and car washes.
In September, the NCC filed a case with the tribunal but then made an about-turn on its decision to prosecute Ford, when the company approached it to negotiate a settlement agreement.
Earlier this year, the NCC announced that it would file papers at the National Consumer Tribunal and instructed its attorneys to prepare papers. It was during that process that FMCSA approached the commission about entering into negotiations.
In terms of the agreement, Ford also acknowledged that it is liable for harm in terms of Section 61(1)(b) of the CPA.
The compensation being offered is over and above that already given to the owners or drivers of Kuga vehicles that burned.
Mabuza said the commission would communicate with the individual consumers who filed their complaints with the NCC to determine the route they elect and to provide any guidance should they so require on the claims process.
Ford Kuga owners who had had their cars repaired, haven’t suffered any damages and are still in possession of their vehicles won’t see any compensation, as Mabuza said: “If the car’s been fine up to now, what’s the issue?”
Ford SA’s general manager for communication, Minesh Bhagaloo, said: “Following the NCC investigation into Ford Kuga recalls in 2017, we’ve agreed on a settlement with the NCC. This proposed agreement will now be considered by the Consumer Tribunal for finalisation.
“We are committed to doing the right thing for our customers. We have learnt from these events and we continue to co-operate with the NCC in order to finalise this matter.”