Ford’s Fields Says Ready to Discuss CAFE Rules

Ford CEO Mark Fields says some fuel-efficient technologies being developed by automakers to meet government-imposed fuel-economy regulations are not being embraced by consumers, a trend the automaker will address with officials during the midterm review of CAFE guidelines in 2017.

“It’s a big issue to meet requirements,” he says in a conference call with analysts and journalists to discuss fourth-quarter and full-year 2014 financial results. “It’s important for consumers to adopt new technologies, and they’re not adopting at a level anywhere near what we expected.”

Fields says Ford welcomes the midterm review in the CAFE process so the feasibility of the goals could be discussed. It’s projected to cost billions of dollars to develop fuel-saving technologies, such as advanced hybrids and pure-electric and hydrogen-fuel-cell vehicles.

“We wanted to make sure we had (a midterm review) to look at the feasibility of the goals, the cost to consumers and the impact on jobs,” Fields says. “It requires a market response for adoption, and we’re not seeing it at this point.”

Ford is not alone in watching consumers shy away from fuel-efficient vehicles and instead purchasing CUVs with increased frequency.

In full-year 2014, deliveries of the Ford C-Max and Fusion hybrids declined 31.7% and 5.0%, respectively, according to WardsAuto data. Larger vehicles, such as the Ford Explorer and Expedition saw sales rise 9.1% and 16.3%, respectively, in the same timeframe.

Fields says there is no evidence the shift toward larger vehicles is due to falling gasoline prices, noting segmentation trends are following their typical pattern.

“If you look at Q4 in the U.S., segmentation changes are consistent with what we see seasonally. Fullsize pickups and premium (vehicles) rise and small cars go down,” he says. “We think Q1 will be key to gauge changes in segmentation because usually we see small vehicles go up.”

Overall, Fields says low fuel prices are a positive as consumers have more disposable income and are more apt to purchase a vehicle. He adds that U.S. vehicle sales are being pushed toward replacement demand, as they have been for the past five years.

Should the market continue to trend toward larger vehicles, Fields says the contract inked with the UAW in 2011 gives Ford some flexibility to shift production to meet demand for hot products.

“We’re fairly limited in terms of plants that produce cars and CUVs, but we have opportunities with work-rule flexibility to add additional weekend days or increase line rates,” he says. “Going forward it’s something we’ll look at as we plan product cycles and our manufacturing footprint to get flexibility.”

Ford reported a 2014 full-year global pre-tax profit of $6.3 billion, a decline of $2.3 billion compared with year-ago, on revenue of $144.1 billion

The automaker’s Q4 pre-tax profit was $1.1 billion, which excluding special items was $197 million lower than year-ago.

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