Car manufacturer Ford will face court over allegations it misled customers who had purchased faulty vehicles, and on-sold surrendered vehicles without disclosing their mechanical faults.

The Australian Competition and Consumer Commission launched proceedings against Ford Motor Company of Australia Limited on Wednesday, alleging the manufacturer had engaged in unconscionable and misleading or deceptive conduct, and made false or misleading representations in its response to customer complaints.

The complaints related to Ford's Focus, Fiesta and EcoSport vehicles, which experienced excessive shuddering and jerking when accelerating, loss of gear selection, sudden loss of power and excessive noisiness, due to a transmission system known as PowerShift Transmission.

All complaints related to models sold between 2011 and 2016. It is alleged that about half of the 70,000 vehicles sold had at least one repair relating to the transmission, while some vehicles were returned up to seven times.

Court documents state that affected customers were told by Ford Australia "there were no problems with their vehicles and, or, that the issues were caused by the drivers of the vehicles or driving style."

It is alleged Ford refused to provide a refund or replacement to consumers, even after multiple repairs failed fix the issue.

Those customers who did receive a replacement vehicle only did so after they made a significant payment, under Ford's "PowerShift Ownership Loyalty Program."

By the end of July last year more than 800 customers had paid, on average, around $7,000 through the program, totalling more than $6.5 million.

It is further alleged that the car maker proceeded to on-sell vehicles surrendered through the loyalty program to wholesalers and customers, without disclosing the systemic mechanical issues.

"The ACCC alleges that Ford's conduct towards customers who had complained of issues with their vehicles was unconscionable," said ACCC chairman Rod Sims.

"We think the allegations we are making here are both extremely serious and indicative of broader problems in the industry...how many times does a consumer have to take their car back before it is judged not fit for service?"

Ford ‎president and chief executive of Ford Motor Company Australia Graeme Whickman said the manufacturer "strongly" rejected the allegations and would challenge them.

"We acknowledge that some customers had a poor experience when the clutch shudder issues on the PowerShift transmission first came to light and we are sorry for this," he said.

"We will work with [the ACCC] wherever needed to help provide certainty about the application of Australian Consumer Law for our industry." 

Ford said it had contacted affected customers to provide them with the latest specification clutch free of charge, adding that more than 12,000 vehicles had already been upgraded

Mr Sims said the watchdog was "alarmed" by the rate of non-compliance with the Australian Consumer Law in the new car industry.

"Cars are the second-most expensive purchase most consumers will ever make and if they fail to meet a consumer guarantee, people are automatically entitled to a remedy."

Mr Sims added that manufacturers still largely dealt with consumers on the basis of their warranty, despite the introduction of consumer guarantees in 2011.

"The allegations show that by mainly dealing with consumers through warranty, manufacturers can run into severe risk of breaching consumer law," he said.

"We are not surprised by Ford's press release. They have been taking this position all along, which I guess, in part, is why we are where we are."

The ACCC is seeking declarations, injunctions, pecuniary penalties, consumer redress orders, corrective advertising, and compliance program obligations.

Any affected customers are encouraged to call their dealer or Ford Australia directly on 133 673.