Ford and the 65 mgp Car

Discussion in 'Economics' started by ShoeshineBoy, Sep 7, 2008.

  1. I cannot believe the incompetence of our policy makers. Ford has made a 65 mgp car and it is only going to sell it in Europe!

    Why??? Because, in their infinite wisdom, our Congress has taxed the heck out of diesel making it unviable here. So, while Europe has switched over half their car production to diesel, we remain a quantum leap behind them with more expensive technologies.

    Let's take every one of those fools in Washington and give them a 365 day vacation. The US will be a better place!
  2. The link was acting up so here's the article:

    "If ever there was a car made for the times, this would seem to be it: a sporty subcompact that seats five, offers a navigation system, and gets a whopping 65 miles to the gallon. Oh yes, and the car is made by Ford Motor (F), known widely for lumbering gas hogs.

    Ford's 2009 Fiesta ECOnetic goes on sale in November. But here's the catch: Despite the car's potential to transform Ford's image and help it compete with Toyota Motor (TM) and Honda Motor (HMC) in its home market, the company will sell the little fuel sipper only in Europe. "We know it's an awesome vehicle," says Ford America President Mark Fields. "But there are business reasons why we can't sell it in the U.S." The main one: The Fiesta ECOnetic runs on diesel.

    Automakers such as Volkswagen (VLKAY) and Mercedes-Benz (DAI) have predicted for years that a technology called "clean diesel" would overcome many Americans' antipathy to a fuel still often thought of as the smelly stuff that powers tractor trailers. Diesel vehicles now hitting the market with pollution-fighting technology are as clean or cleaner than gasoline and at least 30% more fuel-efficient.

    Yet while half of all cars sold in Europe last year ran on diesel, the U.S. market remains relatively unfriendly to the fuel. Taxes aimed at commercial trucks mean diesel costs anywhere from 40 cents to $1 more per gallon than gasoline. Add to this the success of the Toyota Prius, and you can see why only 3% of cars in the U.S. use diesel. "Americans see hybrids as the darling," says Global Insight auto analyst Philip Gott, "and diesel as old-tech."

    None of this is stopping European and Japanese automakers, which are betting they can jump-start the U.S. market with new diesel models. Mercedes-Benz by next year will have three cars it markets as "BlueTec." Even Nissan (NSANY) and Honda, which long opposed building diesel cars in Europe, plan to introduce them in the U.S. in 2010. But Ford, whose Fiesta ECOnetic compares favorably with European diesels, can't make a business case for bringing the car to the U.S.

    First of all, the engines are built in Britain, so labor costs are high. Plus the pound remains stronger than the greenback. At prevailing exchange rates, the Fiesta ECOnetic would sell for about $25,700 in the U.S. By contrast, the Prius typically goes for about $24,000. A $1,300 tax deduction available to buyers of new diesel cars could bring the price of the Fiesta to around $24,400. But Ford doesn't believe it could charge enough to make money on an imported ECOnetic.

    Ford plans to make a gas-powered version of the Fiesta in Mexico for the U.S. So why not manufacture diesel engines there, too? Building a plant would cost at least $350 million at a time when Ford has been burning through more than $1 billion a month in cash reserves. Besides, the automaker would have to produce at least 350,000 engines a year to make such a venture profitable. "We just don't think North and South America would buy that many diesel cars," says Fields.

    The question, of course, is whether the U.S. ever will embrace diesel fuel and allow automakers to achieve sufficient scale to make money on such vehicles. California certified VW and Mercedes diesel cars earlier this year, after a four-year ban. James N. Hall, of auto researcher 293 Analysts, says that bellwether state and the Northeast remain "hostile to diesel." But the risk to Ford is that the fuel takes off, and the carmaker finds itself playing catch-up—despite having a serious diesel contender in its arsenal."
  3. All of the rest-of-world formulas for fuel efficient cars don't work here. Points made in the article:
    1) The US consumer segment is diesel shy, partly because diesel is almost a full dollar per gallon more expensive, but also partly because the Oldsmobile 350 Diesel is etched into our psyche.
    2) CARB and the EPA are against diesel passenger autos as well due to particulate emissions and what not
    3) Cars are weighing more, and more, and more, every generation, because of the demand for more space, a taller vantage point, and ever-more stringent crash standards that mandate the use of heavy steels in the passenger safety cell to prevent deformation in an offset crash (and other crashes)

    The problem will get a lot worse before it gets better IMO.
  4. Actually, they said diesel was so high because of taxes, didn't it?
  5. There are lots of vehicles that get great fuel mileage, you just can't drive them in the US.

    Mini Cooper has a 65MPG diesel. Cant buy it in the US. Why?

    I was in Italy a couple of months ago, drove this little Fiat Panda, it gave me ridiculously high miles per gallon. Drove it for 8 days and filled the tank once. Plus I think I could lift it if I needed to. (thats pretty handy when you want to get it into a tight parking spot) And with the 5 speed, pretty good acceleration and handling, it was really fun to drive. Especially since everyone else is driving a little car too. Don't have to worry about being crushed by an Escalade or Excursion.

    I was in South Korea last year, spoke with a friend that works for a car manufacturing plant there. He says all their vehicles have great mileage, but you can't ship them to the US because you have to use thicker steel for the body panels, have to have airbags, and all the other safety equipment, which adds weight, so now you need bigger brakes, and now since its getting a lot heavier, they have to put in a bigger engine, which has much poorer fuel economy.

    So my question is, if you cannot buy a vehicle unless it passes all these safety standards and has all this safety equipment, why are motorcycles still legal here? Little bit of a double standard???
  6. Corey


    For the same reason alcohol is legal and marijuana is not: precedence.