Ford Says Regulatory Scrutiny on Automakers Is Rising Globally

Regulators around the world are getting tougher on automakers after a series of cheating scandals on fuel economy and emissions, with China set to become the strictest, according to Ford Motor Co. Chief Executive Officer Mark Fields.

“The regulatory environment around the world is becoming more and more strict, particularly on things like greenhouse gases and fuel economy,” Fields told reporters Saturday in Beijing, ahead of China’s biggest auto show that opens next week. Going by the rules that are being proposed, China will be the toughest regulatory regime over the next five years “given some of the societal factors around air pollution,” he said.

The second-largest U.S. carmaker joins its global peers in facing rising scrutiny of their vehicles’ fuel economy and exhaust emissions in the wake of wrongdoing by Volkswagen AG and Mitsubishi Motors Corp. in the past seven months. Ford had a brush with regulators of its own in 2013 and 2014, when it twice lowered the mileage ratings of several hybrid models.

Volkswagen on Friday more than doubled charges related to its rigging of 11 million car engines to 16.2 billion euros ($18.2 billion), as the German automaker repairs vehicles installed with software that circumvented emissions rules. Two days earlier, Mitsubishi Motors said it exaggerated the fuel economy of several minicar models in Japan and that its testing methods have been out of compliance with Japanese standards since 2002.

Car-pollution levels are now likely to be watched more closely around the world including in China, where Dearborn, Michigan-based Ford is building on its record 1.1 million vehicles sold last year. The company’s deliveries climbed 14 percent in the first three months of 2016 to 314,454 units.
Fields said that Ford meets emissions requirements “wherever it does business.” The company is supportive of Europe considering on-road testing for emissions and would comply if China follows suit, he said. The automaker will produce the Mondeo hybrid in China by the end of this year and import the C-Max Energi plug-in early 2017.

Stricter rules in China will come amid a decline in industrywide pricing, which has dropped over the past six to seven years, according to Fields.

Bob Shanks, the automaker’s chief financial officer, told analysts last month that Ford sees industrywide prices of new vehicles in China declining by about 6 percent this year, in line with the drop in 2015.

On the sales tax cut on 1.6-liter engines and smaller that’s scheduled to expire at the end of 2016, the government may consider the health of the economy and stability of markets when it decides whether to extend the reduction, Fields said.

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