The 65 mpg Ford, the U.S. Can't Have...

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Ford's Fiesta ECOnetic gets an astonishing 65 mpg, but the carmaker can't afford to sell it in the U.S. http://images.businessweek.com/story/08/600/0904_mz_ecocar.jpg


The ECOnetic will go on sale in Europe in November


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 (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=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 (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TM)) and Honda Motor (HMC (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=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 (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=VLKAY)) and Mercedes-Benz (DAI (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=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 (http://www.businessweek.com/autos/autobeat/archives/2008/09/can_diesel_ever.html) 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 (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=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.


TOO PRICEY TO IMPORT


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.

By David Kiley (http://www.businessweek.com/bios/David_Kiley.htm)
http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=autos_autos+--+lifestyle+subindex+page_top+stories

http://www.dvorak.org/blog/?p=23715

http://www.dailypaul.com/node/74834#comment-801748

[Danke]

Building a new plant? Don't they just have to retool a plant? I know they are shutting down a plant where I live.

[AutoDas]

Are these US gallons or imperial gallons? The ones they use in Europe have a bigger volumetric size.

[acptulsa]

Aren't those bumpers attractive? You can't have those bumpers. The U.S. government, led by the nose by the insurance lobby, has determined that you can't get through a parking lot without hitting another car, so you have to have bumpers that will absorb the energy of a two and a half mile per hour impact without damage. This precludes the use of such attractive bumpers on any car sold in the U.S.

Likewise our special air bags, our side door guard beams, our special rollover structure--all desired by the insurance lobby and now required on cars sold in the U.S. so we don't actually have to learn how to actually drive properly. Because of these things and our emissions regulations, it costs multiple millions to prepare a car for the U.S. market--and that's only if it was designed to come here. If it wasn't designed around our regulations from the start, it costs billions. And the fact that diesel fuel contains sulfur does not make it easier for it to meet our emissions regulations, which is the most expensive part. The fact that they do seem to want to put new bumpers and such on it and bring it here doesn't help get the diesel certified. And then there's the other diesel problem--they make plenty of torque, but little horsepower.

These articles have been appearing since about the time I was born. Oh, look how stupid this or that member of the Big Three is not to bring this slick little car to us. The thing is, if you haven't driven (for example) a 1958 VW Microbus you just don't know what the Europeans put up with. They pay four times what we pay for fuel. I expect they're paying even more than that right now--probably about twelve bucks a gallon. If you had to pay that, you'd be willing to put up with a real dog. Hell, we pave our streets straight up hills that cars like this are unable to climb!

So, some liberal and likely clueless author says we ought to have this wonderful car. But if Ford offered it to us, we'd try to get out in U.S. traffic, nearly get run over before we get up to speed, take it back to the dealer and cuss the sales person out for offering us a test drive and trying to get us killed. European carmakers only send us their best performers. We've proven time and again we won't buy anything else from them. And this is not Ford of Europe's best performer.

Maybe the author of this article considers acceleration an unnecessary luxury. Maybe he knows perfectly well that this thing would never sell in this country, but also knows his editor is an idiot and this was just a way (a proven way) to sell a story. But this car is a dog and if Ford spent the billions to prepare it for the U.S. Market they'd lose their money. Buy the bull if you want, but that's the bottom line...

[tangent4ronpaul]

Building a new plant? Don't they just have to retool a plant? I know they are shutting down a plant where I live.

Well of course they can't re-tool the plant by you - I mean NAFTA gives them a tax break to ship our jobs overseas, and they'd have to pay people better wages then in Mexico as well as match SS contributions, pay health bennies and deal with unions. Can't possibly build cars in the US - The government has very clearly said they want our manufacturing to happen in OTHER countries!

-t

[jkr]

ford looks ready

gm, not so much

and the other one? no opinion

[acptulsa]

and the other one? no opinion

One hell of a good question, isn't it? What worldwide properties Chrysler managed to get a hold of they sold back in the late seventies or left with Daimler Benz in the divorce. So, they are a real rarity in this modern world--a non-multinational carmaker.

I wish them luck with that. They'll need it. Add to this woe the fact that they have a crazy, semi-competent CEO mainly famous for trashing Home Depot and you might be a bit leery of Cerebrus stock for a while.

[bojo68]

Aren't those bumpers attractive? You can't have those bumpers. The U.S. government, led by the nose by the insurance lobby, has determined that you can't get through a parking lot without hitting another car, so you have to have bumpers that will absorb the energy of a two and a half mile per hour impact without damage. This precludes the use of such attractive bumpers on any car sold in the U.S.

Likewise our special air bags, our side door guard beams, our special rollover structure--all desired by the insurance lobby and now required on cars sold in the U.S. so we don't actually have to learn how to actually drive properly. Because of these things and our emissions regulations, it costs multiple millions to prepare a car for the U.S. market--and that's only if it was designed to come here. If it wasn't designed around our regulations from the start, it costs billions. And the fact that diesel fuel contains sulfur does not make it easier for it to meet our emissions regulations, which is the most expensive part. The fact that they do seem to want to put new bumpers and such on it and bring it here doesn't help get the diesel certified. And then there's the other diesel problem--they make plenty of torque, but little horsepower.

These articles have been appearing since about the time I was born. Oh, look how stupid this or that member of the Big Three is not to bring this slick little car to us. The thing is, if you haven't driven (for example) a 1958 VW Microbus you just don't know what the Europeans put up with. They pay four times what we pay for fuel. I expect they're paying even more than that right now--probably about twelve bucks a gallon. If you had to pay that, you'd be willing to put up with a real dog. Hell, we pave our streets straight up hills that cars like this are unable to climb!

So, some liberal and likely clueless author says we ought to have this wonderful car. But if Ford offered it to us, we'd try to get out in U.S. traffic, nearly get run over before we get up to speed, take it back to the dealer and cuss the sales person out for offering us a test drive and trying to get us killed. European carmakers only send us their best performers. We've proven time and again we won't buy anything else from them. And this is not Ford of Europe's best performer.

Maybe the author of this article considers acceleration an unnecessary luxury. Maybe he knows perfectly well that this thing would never sell in this country, but also knows his editor is an idiot and this was just a way (a proven way) to sell a story. But this car is a dog and if Ford spent the billions to prepare it for the U.S. Market they'd lose their money. Buy the bull if you want, but that's the bottom line...

There's a couple of problems in your assumed facts. 1. US diesel now does NOT have sulphur in it.

2. Mercedes Benz has been selling US diesels for years that are as fast or FASTER than the same car with a comparably sized gas engine. The way I remember it, it started when they brought out the 4 valve/cylinder headed diesel.

I'll disagree that americans won't put up with slow crap too. I live in a lefty tree hugging idiot area, and see them driving NATURALLY ASPIRATED Mercedes 300d diesels, and those might win against a 58 vw for slow.(I was driving one up a hill, and was outrun by a loaded steel truck)

I will agree with ya on the lack of desirability of such though, I drive a 280hp, 4k#, low 14 second 1/4 mile, 28 mpg car.

[acptulsa]

There's a couple of problems in your assumed facts. 1. US diesel now does NOT have sulphur in it.

2. Mercedes Benz has been selling US diesels for years that are as fast or FASTER than the same car with a comparably sized gas engine. The way I remember it, it started when they brought out the 4 valve/cylinder headed diesel.

I'll disagree that americans won't put up with slow crap too. I live in a lefty tree hugging idiot area, and see them driving NATURALLY ASPIRATED Mercedes 300d diesels, and those might win against a 58 vw for slow.

I will agree with ya on the lack of desirability of such though, I drive a 280hp, 4k#, low 14 second 1/4 mile, 28 mpg car.

Yes, but diesel does have stuff in it that gas doesn't, and since it doesn't burn as quickly as gasoline it still poses special challenges in terms of emissions. But you're right--I had forgotten that tidbit. As for fast diesels, you can get horsepower out of a diesel by turbocharging the hell out of it. Don't count on it continuing to get 65 mpg when you're through, though.

[bojo68]

Yes, but diesel does have stuff in it that gas doesn't, and since it doesn't burn as quickly as gasoline it still poses special challenges in terms of emissions. But you're right--I had forgotten that tidbit. As for fast diesels, you can get horsepower out of a diesel by turbocharging the hell out of it. Don't count on it continuing to get 65 mpg when you're through, though.

I'll go along with most of that, except that diesel burns FASTER than gasoline.(the reason they don't turn as many rpm(I've never seen a diesel turn over 6000RPM) is that the diesel burn rate is so fast that the parts to contain it have to be heavier, which limits speed)

[acptulsa]

I'll go along with most of that, except that diesel burns FASTER than gasoline.(the reason they don't turn as many rpm(I've never seen a diesel turn over 6000RPM) is that the diesel burn rate is so fast that the parts to contain it have to be heavier, which limits speed)

I don't think that's quite right. Diesel engines do not (though seventy year old 'distillate' engines did) actually burn the fuel, they explode it. That is the difference you're talking about. And, yes, explosions are faster than flames, and yes, the explosions are why diesels make torque without so much horsepower. The torque and the violence of the explosion require the heavy duty reciprocating parts.

[JohnMeridith]

the government's regulations on diesels, bumpers and so on adding into the cost factor make it stupid for ford to bring that car over.