(Updates throughout with comments, new data on fuel economy)
By Justin Hyde
NEW YORK, April 17 (Reuters) - Ford Motor Co. said on Thursday it would miss its 2005 deadline for improving the fuel economy of its sport utility vehicles by 25 percent -- a high-profile goal set by the world's second-largest automaker to much acclaim three years ago.
Phil Martens, Ford's vice president of product creation for North America, said Ford had decided to delay its SUV fuel economy improvements in favor of trying to reach a 20 percent to 30 percent improvement in average fuel economy across all the vehicles it sells in North America by the end of the decade.
The SUV target is "an important goal of ours. We have pushed it out a little bit," Martens said in an interview at the New York auto show.
"When you look at what we're planning to do on balance, we have a broader corporate fuel economy improvement today than we have had, and it's one of those tradeoffs that we have to make which says we can do a specific focus on just SUVs, or we can do a broader corporate effort," Martens said.
"My judgment is the total corporate effort delivers more for the customer," he added.
Ford captured the nation's attention in 2000 when it pledged to increase its SUV fuel economy, part of Chairman Bill Ford Jr.'s strategy to improve the automaker's environmental image. General Motors Corp. quickly followed by vowing to keep its SUVs more efficient than Ford's.
The news drew an outcry from environmental activists already angered by the slow pace of efforts to cut tailpipe emissions and lessen U.S. dependence on imported oil.
"Ford is proving to Americans that we can't trust Ford's promises because they keep moving the goalposts back," said Dan Becker with the Sierra Club.
"Ford is breaking a huge promise here," Jon Coifman, a spokesman for the Natural Resources Defense Council, told Reuters. "This was a pledge that rocked the industry when they made it, and now they are walking away from it."
FOCUS ON COST CUTTING
Ford's pledge would have raised its average SUV fuel economy from about 16 miles (25 km) per gallon to about 20 miles (32 km) per gallon for all SUVs it builds, including Land Rover, Volvo and Mazda. As with federal fuel economy standards, Ford's target was not an average of all SUV models, but the average of all SUVs it actually sells.
Ford executives have warned over the past year that the goal was getting tougher, partly because of a renewed focus on cutting costs as part of its multiyear turnaround plan. In addition, some technologies failed to deliver as much improvement as Ford was counting on.
One of those was a gasoline-electric hybrid version of the Ford Explorer SUV, which was canceled when it increased fuel economy by less than Ford's goal of about 10 percent.
Ford's corporate truck fuel economy average has been steady over the past two years at 20.5 miles per gallon, according to federal data. The average fell from 21 mpg in 2000 after Ford bought Land Rover.
Federal documents released earlier this month suggested Ford was facing a tougher struggle to improve fuel economy in all its SUVs, pickups and vans. Ford told the government last year it could meet higher truck fuel economy rules for 2005 through 2007, but it revised its forecasts down earlier this year. The government now estimates the new rules will cost Ford $253 million.
MORE HYBRIDS, FEWER GEARS
Ford plans to begin building a hybrid Ford Escape SUV late this year, with an annual sales target of 18,000 to 22,000 vehicles. The hybrid system in the Escape allows it to get nearly 40 miles per gallon in city driving, and the system will also be offered later this decade on the Ford Futura midsize sedan unveiled earlier this week.
Martens pointed to a number of other efforts as proof of Ford's commitment to higher fuel efficiency, including low-emission versions of its Ford Focus compact car, a gearless transmission for the upcoming Ford Freestyle wagon and a new six-speed transmission for the Lincoln Navigator SUV.
"When you look at a year ago, we were very focused on SUVs," Martens said. "Now, when I look at what we want to do, we're putting the effort where we need it."
But Coifman said Ford's backtracking on the 2005 deadline put any future pledges in doubt. "If they can't deliver on this (25 percent goal) it's hard to feel optimistic about another stretch goal," he said.