Higher Fuel Tax Could Drive Market in Right Direction, Mulally Says

Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – Ford Motor Co. CEO Alan Mulally suggests a fuel-tax hike might be a way to address national concerns about fuel consumption and cause Americans to buy smaller vehicles, but he refrains from backing a specific proposal calling for a 50-cent-per gallon increase.

“Not necessarily,” Mulally says when asked here at the Management Briefing Seminars whether he was throwing his support behind Michigan Congressman John Dingell’s call for a 50-cent hike. “But it is necessary that the auto industry join in the debate” about governmental efforts to boost corporate average fuel economy requirements. “A piece of that could be a tax.”

Mulally clearly is no fan of CAFE, saying “I’ve never seen a market-distorting policy like it.

“It is important for the industry to say what we stand for, not what we’re against,” he adds. “We absolutely believe in fuel efficiency, alternative-fuel technology and a clean environment.”

Meanwhile, although Ford made $750 million in the second quarter, Mulally expects the auto maker to lose money in the remaining quarters due to a traditional tapering of vehicle sales toward the end of the year.

But proving that everything is relative, he reiterates a prediction Ford at least will lose less money in 2007 than in 2006.

He says the auto maker is addressing its fundamental problems, such as manufacturing overcapacity and a product lineup that relied too heavily on fullsize SUVs and pickup trucks.

That reliance “worked in the past, kind of, but it’s not great for the future.”

Alan Mulally

In a short time, Ford’s vehicle-sales mix has shifted from 70% big trucks and 30% cars to closer to a 50/50 split, he says.

Also on the CEO’s to-do list is better leveraging of Ford’s global operations with a greater sharing of product development and components worldwide.

Despite its size, he says Ford was the “smallest large company” he has ever seen. “Ford is going to be a global company. We have been a regional company.”

Mulally is closing in on his first year as Ford CEO, coming from outside the auto industry. The former head of Boeing Corp. was asked what advice he might give to another “outsider,” Robert Nardelli, the new chairman and CEO of Chrysler LLC and former head of The Home Depot.

Mulally says he wouldn’t presume to offer advice on how to run Chrysler.

Then he adds: “I’d advise him to really understand everyone’s point of view, from employees to dealers to suppliers. That would be my biggest advice: include everybody.”

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