U.S. REGULATIONS DELAY IMPORT OF EUROPEAN COMPACT CARS

With consumer demand shifting from SUVs and trucks to fuel-efficient cars, automakers are preparing to release their European small cars into the U.S. market. But the crossover isn’t that easy. According to www.online.wsj.com, U.S. regulations are causing automakers to scramble for cost-effective ways to adapt their European small cars to new guidelines.  

The article specifically details the efforts of Ford Motor Co. to bring over at least six vehicles that the Deaborn, Michigan, automaker currently offers in Europe. The company is preparing to spend $3 billion on the effort, and have announced plans to convert three of its North American SUV and truck factories to make small cars.   

But in order to follow U.S. safety regulations and insurance standards, Ford must update their European small cars with some potentially costly parts and steel reinforcements. Unless these changes are done efficiently, the vehicles could override the profits Ford needs to make on them or become too heavy for the desired fuel-efficiency.

Bumpers are among the biggest challenges that the automaker faces. Whereas European regulations require bumpers that cause minimal injury to pedestrians, U.S. standards require heavier bumpers since the focus is on causing no damage to a passenger car at 2.5 miles per hour.

Despite the obstacles, with Ford reporting a second quarter loss of $8.7 billion, the automaker’s survival may depend upon the successful introduction of their European cars to the United States. A newly designed Ford Fiesta subcompact recently had its launch preview in Europe. The Fiesta, originally intended for Europe and Asia, has been reworked for North America and is scheduled to arrive in dealer showrooms in the United States in the first half of 2010.

As the article further states, even with the successful re-tailoring of their European cars, Ford may still face hurdles. Ford must contend with the solid small-car reputation of Toyota and Honda. Also, it isn't clear how profitable Ford’s European cars would be in the United States. A car maker's profit margin on cars can be just a few hundred dollars, while each fullsize pickup and SUV that Detroit’s big three sells generally produces a pretax profit of approximately $8,000.

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