Ford to Retool Some U.S. Plants to Produce Fuel-Sipping Cars Now Made in Europe

  At right, a European Ford Fiesta.

Ford Motor Co. is preparing plans to retool some U.S. plants to produce small passenger cars that the company has been making and selling mainly in Europe, the Wall Street Journal reported today.

The move, parts of which could be announced Thursday as part of Ford's second-quarter earnings report, is aimed at helping the company increase production of fuel-efficient cars in North America in response to this year's rise in gasoline prices, the newspaper reported, citing people familiar with the matter.

It is the most dramatic step so far by any of Detroit's Big Three automakers in reaction to the serious bind the auto industry faces in the U.S. market.

Ford's effort to bring vehicles from Europe to the U.S. mirrors a similar move by Toyota Motor Corp. to produce more cars and fewer trucks in the U.S. It recently announced it will use a Mississippi plant now under construction to make the Prius hybrid instead of an SUV, as it had originally planned.

Earlier this week, General Motors Corp. said it will try to cut costs by $10 billion over the next 18 months, and it is trying to increase output at the car plants it has in the U.S. But it hasn't announced plans to convert truck plants to car production, or move production of some of the cars it makes overseas to U.S. factories.

GM already imports into the U.S. one compact that it assembles in Europe: the Saturn Astra. But analysts believe GM loses money on each Astra it sells in the U.S. because of the weak dollar, which makes goods produced in the 15-nation Euro zone more expensive. By making its European models in U.S. plants, Ford can avoid the foreign-exchange impact and sell the vehicles at more attractive prices.

Scott Doggett, Contributor

Posted by

Scott Doggett July 21, 2008, 12:40 PM

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Emissions, Ford, Fuel Economy, General Motors