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Old 03-03-2003, 10:51   #1 (permalink)
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Ford knows what buyers want, Padilla says, but will they pay?

By Dale Jewett
Automotive News / March 03, 2003

DETROIT -- While auto engineers tackle the challenges of making vehicles safer and less polluting, the biggest roadblock to new technologies is getting customers to pay for them, the head of Ford's North American operations said Monday.

"We have a good idea of what features customers will want in their vehicles by 2010," Jim Padilla said. "But the paradox is that they don't expect to pay more for their vehicles."

That puts the burden on auto engineers to find ways to cut costs from vehicles without taking away functions and features that are valued by consumers, Padilla explained during a speech to open the SAE World Congress on Monday.

As an example of the industry's technical capabilities, Padilla cited the Ford Focus, which is offered with stability control and side impact airbags. The customer take rate on those options is low, he said.

"We can add all kinds of safety and environmental features, the challenge is to make them inexpensive enough that customers will take them," Padilla said.

In the short term, luxury vehicle buyers will likely be offered new safety and environmental technology first because they are the ones able to pay the higher prices that make it possible for automakers to justify the expense.

"It's not a case of what would Jesus drive, but what could he afford," Padilla said.

Auto engineers must find new ways to broaden the offerings of safety and environment technology in order to get the most benefit, he added.

Ford Motor Co. expects that the internal combustion engine will still be the dominant power source for vehicles in 2010, with diesels playing a leading role in Europe and gasoline engines retaining the lead in the United States, Padilla said. Six-speed automatics and continuously variable transmissions will be more common.

U.S. government agencies will have to take another look at the tradeoffs between improving fuel economy and emissions limits if diesels are ever going to play a significant role in the United States, he said.

Diesels are more expensive than gasoline engines, said Padilla, but they are cheaper than hybrids and they deliver the same environmental benefits.

Fuel cell vehicles will be available in 2010, but they will not be commonplace, Padilla said. The technology remains expensive and the fuel will be hard to find.

As an alternative, Ford is pushing development of supercharged internal combustion engines that run on hydrogen instead of gasoline. The automaker made that powerplant a key part of its Model U concept vehicle unveiled at the Detroit auto show in January, and delivered a technical paper on the technology at the SAE show.

By using off-the-shelf technology, a supercharged hydrogen engine delivers the benefits of a zero emission vehicle at a fraction of the cost of fuel cells, Padilla noted. Such vehicles also could help foster the creation of a refueling infrastructure.

Manufacturing also will be a key area to watch. "Fortunes are made or lost in the business in manufacturing," Padilla said.

By moving to a set of common platforms and reducing waste, Padilla said his company will launch 65 new Ford, Lincoln and Mercury products over the next five years.

He expects manufacturing to drive a 10 percent annual improvement in productivity in Ford. The automaker will reduce the number of platforms it uses by 25 percent by 2010, Padilla added. "With new flexible manufacturing systems and faster changeovers, we'll have saved $1.5 billion to $2 billion over the next decade."

Said Padilla: "The future in this business is not whether to thrive or survive. There may not be a choice anymore, you'll have to thrive to survive."
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