Even though gasoline prices are down to almost $2 per gallon around here as election day approaches, Ford CEO Alan Mulally apparently doesn't think the current situation will last. Mulally told Automotive News that the Dearborn automaker is staying the course on its plan to introduce a half dozen new smaller vehicles in the U.S. market in the next couple of years. The respite in fuel prices may give Ford some breathing space on the launch of its new F-150 pickup truck. Last week the company announced it would bring back 1,000 workers at its Dearborn truck plant. However, the company has not changed plans to close and/or retool several truck plants over the next 18 months to build smaller cars.

Mulally also told the interviewer that the company is still considering bringing the Ka to the U.S. market and will be watching demand for smaller cars. The challenge for Ford and other automakers is offering small cars like the Ka and Fiesta at a profitable price point. That's even more of an issue with the current economic conditions. Prior to the recent financial collapse, it was hoped that they could offer small cars with the levels of equipment offered in bigger cars and thus command a high enough price to make money. That may prove to be more difficult now as Mulally acknowledged that we could see U.S. car sales dip to as low as 11-12 million annually next year compared to a high a few years ago of 17 million. You can check out video of the AN chat with Mulally here.

[Source: Automotive News - sub. req'd]

In what may be the obvious move in recent memory, Ford is apparently scrambling right now to figure out how to quickly re-tool truck assembly plants churning out trucks that no one wants in order to build cars that they can't get enough of. The Mexican plant that will build the Fiesta is the first, shifting from the F-150s it currently builds to Ford's new mini. But Ford has plenty of other mostly idle plants that CEO Alan Mullaly wants to see turning out some of the company's popular European models like the Mondeo and the Focus. Plant managers and local union leaders are apparently going to be gathering in Dearborn on Friday to help work out a plan to shift the product mix to where it needs to be in a world of $4+ gasoline.

The European lineup will evidently be the key to all of this. While the Ford Fusion (and its siblings) is getting a major refresh later this year, the full redesign that will happen a couple years down the road will see it converge once again with the Mondeo. Meanwhile, the Focus that had its second best month ever in May will get replaced by the European version in 2011. Similarly, the Ohio plant that builds the big E-Series vans will also switch over to the smaller Transit van. Ford should be outlining the full plan next month.

[Source: Detroit News]

Ford CEO Alan Mullaly came out publicly in favor of new fuel taxes in place of fuel economy standards as a way to reduce fuel consumption. At the Management Briefing Seminar in Traverse City MI this week he called CAFE a failure that has done nothing to reduce American dependence on foreign oil or greenhouse gas emissions. Instead he said that Congress should give consideration to Rep. John Dingell's (D-MI) recent gas tax proposal.

While Mullaly is correct in arguing that oil imports have only increased since CAFE went into effect, there is also the fact that the standard has not risen since it reached its current level in late 1980s. However, the reality is also that consumers in this country will also tend to buy the biggest, most powerful vehicle they can afford to operate. Why else would F-150s and Explorers outsell by such a wide margin small cars that are and have been available.

Sales of larger, thirstier vehicles have only slackened as gas prices have risen but not nearly enough. Only when the cowardly politicians actually step up to the plate do what needs to be done to address demand for oil with tax changes will the problem really be addressed.

[Source: Detroit News]