Will green standards make cars less affordable? Possibly, says Ford exec.
Stricter emission standards in the European Union could mean higher prices for consumers. Will people keep buying cars if prices are raised?
Stricter emissions standards may raise the average cost of new vehicles, but will that make them "elitist?"
The increasingly sophisticated technology required to improve the efficiency of new gasoline and diesel cars does indeed add to their cost.
But Jim Farley—the head of Ford's European operations—believes this could make cars so expensive that they will be unaffordable to the average consumer.
Regulations need to consider affordability, or risk creating an "elitist industry" where cars are only attainable by the wealthy, Farley told the Financial Times (subscription required).
European Union regulations have traditionally focused on carbon dioxide. Now, in the wake of the Volkswagen diesel scandal, they will also emphasize nitrogen oxides as well.
That adds a further dimension to the next iteration of rules expected to require lower carbon emissions and higher fuel economy.
The latest set of rules also require carmakers to conduct real-world emissions tests as a hedge against "defeat device" software like the kind VW used to cheat on laboratory tests.
However, draft rules allow carmakers to exceed the legal limits of nitrogen oxides into the 2020s. Regulators say this is because they are unsure of the accuracy of equipment used for on-road testing.
Ford's Farley said that regardless of how the rules are changed, consumers "often have budgets" that have to be adhered to.
His comments come after a successful 2015 for Ford in Europe, and continued strong sales of its pricier vehicles, notes the Financial Times.
Ford recorded $434 million in pre-tax profit in the first three months of 2016—more than in the whole of 2015.
Consumers are buying larger models and adding more options, Farley said.
One popular seller is the Kuga, the crossover utility vehicle sold as the Escape in North America.
While it's considered a compact crossover in the U.S., the Kuga/Escape is fairly large by European standards—and still does well in the showroom.
Another popular model in Europe arguably goes much further in the opposite direction from fuel efficiency.
It's the Ford Mustang, now officially sold in Europe for the first time. Its popularity and the level of consumer interest it's generated have surprised Ford management.
In March, it outsold the Porsche 911 and Audi TT in their home market of Germany, according to the Financial Times.
Given those recent trends, the timing of Farley's concerns could be viewed as ironic.
Or perhaps he's simply looking ahead to the next downturn, when affordability may again rise to the top of buyer concerns.
This article first appeared at GreenCarReports.
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