Ford Motor Co. yesterday warned the Reagan administration that it would turn two of its big "classic American" cars into imports if the government refuses to grant a long-term reduction of federal fuel economy standards.
Ford Chairman Donald E. Petersen presented the "import" plan during a meeting with Transportation Secretary Elizabeth Hanford Dole, government sources said.
Under the Ford plan, the company would increase the foreign content of its best-selling Crown Victoria and Lincoln-Mercury Grand Marquis passenger cars to 26 percent, beginning in the 1987-model year. Passenger cars with less than 75 percent U.S.-Canadian parts are regarded as imports under U.S. law and, as such, are not subject to fuel-economy regulations affecting domestic new-car fleets.
The Ford plan could eliminate several hundred jobs in the U.S. auto parts industry. But the strategy also could be adopted by General Motors Corp., the nation's largest auto maker. If that happens, government and industry sources predicted, several thousand U.S. auto jobs could disappear.
The Grand Marquis and Crown Victoria, with their powerful five-liter, V-8 engines, are two of Ford's most gas-hungry cars, averaging 18 miles per gallon in the city and 26 mpg the highway. Removing those cars from Ford's domestic fleet would put the auto maker in compliance with federal fuel economy standards for 1987 and beyond, government and auto industry sources said yesterday.
Both Ford and GM, the only domestic producers of large volumes of full-size cars, already have wrung fuel-economy concessions out of the federal government. The National Highway Traffic Safety Administration, responding to petitions from the two auto makers, agreed last summer to lower the 1986-model corporate average fuel economy (CAFE) standard to 26 mpg.
The standard for 1986 and beyond was supposed to be 27.5 mpg. But GM and Ford argued that they were being penalized for meeting U.S.-market demand for powerful, full-size cars.
Industry statistics support the auto makers' reading of the market. Ford, for example, sold 173,509 Crown Victoria models in the just-concluded 1985-model year, a 10 percent increase over last year's performance. The "Crown-Vics," as they are known in the industry, carry a base price of about $14,000.
Ford and GM officials had threatened to eliminate production of their big cars altogether. That action, according to Commerce Department analysts, would have taken 750,000 cars out of annual U.S.-Canadian auto production at an estimated cost of 110,000 U.S. jobs.
The Crown Victoria and Grand Marquis today are assembled in Canada, but still are regarded as domestics because of a long-standing treaty affecting U.S.-Canadian auto production, and because 95 percent of their parts are made in the United States.
Ford officials, while refusing to comment on what was said by Petersen and Dole at yesterday's meeting, confirmed that their board of directors voted in September to cut the domestic content of the Crown Victoria and Grand Marquis to at least 74 percent.
"Our people hate like hell to implement that plan," Petersen said in an interview with The Post. "They obviously hope that, despite the board's action, they won't have to."
One Department of Transportation source familiar with the fuel-economy issue said yesterday that Ford, which fell 1.6 mpg under the 27.5 mpg standard that remained in effect for the 1985-model year, is now liable for up to $90 million in fines for that period.
Under the 1975 Energy Policy and Conservation Act, which established the CAFE standards, manufacturers failing to meet the law are fined $5 for each tenth of a mile they fall below the limit. That fine is then multiplied by each car in the auto maker's new-car fleet, regardless of whether individual vehicles within the fleet meet the standard.
A system of carryforward and carryback credits can be used to mitigate penalties. "But Ford ran out of carryforward credits for previous compliance in the 1985-model year," the government source said. Without further relaxation of CAFE standards, Ford could become liable for even higher fines in subsequent years, the source said.
Ford officials, without confirming or denying the penalty report, said that they are not as concerned with penalties as they are with being in violation of the law. Petersen said increasing the foreign content of the Crown Victoria and the Grand Marquis would be the "least painful way," in terms of job loss, of complying with the law.