Ford is faced with rebuilding the C-Max Hybrid's sales after volume tanked when the company was forced to lower the vehicle's estimated fuel economy in August.
"Consideration for the product and consideration for the purchase of C-Max declined significantly after August," Joe Hinrichs, Ford's president of the Americas, said during an interview at the New York auto show. "We need to reinvest in the product because it's a great product."
Ford restated the C-Max's estimated fuel economy to 43 mpg combined (45 mpg city/40 highway) from 47 mpg combined (47 mpg city/47 highway) after lawsuits and complaints from customers who claimed their vehicles failed to achieve the fuel economy listed on the sticker. Ford paid $550 to customers who bought a C-Max and $325 to lease customers.
Sales of the C-Max plunged from 2,411 in August to 1,424 in September and have not fully recovered. Sales were down 49 percent in March from the same month a year earlier and have plunged 54 percent to 3,933 through the first three months.
To boost sales, Ford is offering $1,000 cash or 1.9 percent financing for 60 months on the 2014 C-Max Hybrid. It is offering a larger incentive on leftover 2013 C-Max Hybrids: 0 percent interest for 72 months plus $1,250 or $2,750 in total cash.
Dealers say customers have shown less interest in the C-Max Hybrid since the fuel economy restatement.
Chris Lemley, owner of Sentry Ford-Lincoln in Medford, Mass., says the C-Max Hybrid is getting competition from within Ford's lineup in his showroom.
"The Fusion Hybrid is outselling C-Max -- I bet it's three to one, four to one," he said. "Most people would agree the Fusion is a more substantial vehicle. It's one car class bigger. It tends to be around the same payment."
Ford did not restate the Fusion Hybrid's estimated fuel economy, which is still a combined 47 mpg. Fusion Hybrid sales have dropped just 6 percent for the first three months to 9,606. The total is more than double C-Max sales.
Hybrids in general have been slumping as automakers offer more high-mpg crossovers with conventional powertrains.
"The whole segment is down and we've been seeing it for a while," said Karl Brauer, senior analyst with Kelley Blue Book. "What's on the rise is small to mid-size SUVs. Those are the segments where there is a lot of interest."
Brauer says consumers are lapping up nonhybrid crossovers with increasingly impressive fuel economy numbers. For example, the 2014 Mazda CX-5 with a 2.0-liter four-cylinder engine and a six-speed manual is listed at 26 mpg city/35 highway/29 combined. The 2014 Ford Escape is listed at 23 mpg city/32 highway/26 combined.
"You combine the SUV profile with 30-plus mpg and you're going to pull in a lot of people who a couple of years ago might have thought hybrid," he said.
C-Max isn't the only hybrid suffering a sales slump. Hybrid sales overall dropped 16 percent through March. Sales of the C-Max's archrival, the Toyota Prius V, have dropped 30 percent to 6,001 through the first three months.
"Remember the C-Max was supposed to be Ford's Prius," Brauer said. "The idea was that it would be this identifiable vehicle. That only works if people care about green-oriented vehicles, and the appetite for those is falling."
Hinrichs says Ford remains committed to the C-Max.
"Even with the new label the C-Max is still best in class for fuel economy over the Prius V," he said. The C-Max "has more space and 60 more horsepower, better fuel economy, better space, better price."