Ford talking to EPA about fuel economy
Consumer Reports says hybrids don’t hit their target mpg. Washington remains wild card in recovery efforts.
DETROIT — Ford said Friday that it’s talking to the government about the fuel economy of its hybrid cars after a report suggested they’re falling short of targets.
Consumer Reports said last week that Ford’s new C-Max hybrid didn’t meet the published fuel economy of 47 miles per gallon, averaging 38 miles per in the magazine’s testing. Other hybrids — including the Ford Fusion and Toyota Prius V — have also fallen short in the magazine’s tests.
Ford said it followed the Environmental Protection Agency’s guidelines when it set its fuel economy standards. But the EPA’s hybrid tests don’t exactly mimic realworld driving.
For example, Consumer Reports said it measures highway fuel use for a car going 65 mph, but the EPA’s highway test speed averages 48 mph.
Ford’s global vehicle development chief Raj Nair said the way owners drive their hybrids can also affect performance. For example, driving a hybrid car 75 mph, instead of 65 mph, can cost the driver seven mpg, Nair said.
Hot or cold temperatures can also affect the numbers.
Nair said Ford is talking to the EPA to see if the agency needs to change the way it tests hybrids. The EPA said Friday that it is reviewing Consumer Reports’ results.
Fuel economy dominated the conversation Friday as Ford introduced two new commercial vehicles that will go on sale late next year.
The Transit, which will eventually replace Ford’s E-Series vans, will haul 300 pounds more than the current E-Series and has twice the volume. Ford will offer three engine choices and three roof heights.
The company also unveiled a smaller Transit Connect commercial vehicle, which is getting its first big makeover since it went on sale in Europe a decade ago.
The new Transit Connect can tow up to 2,000 pounds for the first time. It comes in short and long versions. Ford will also offer an optional EcoBoost engine in the Transit Connect that is expected to get more than 30 mpg.
Ford didn’t release prices or final fuel economy numbers for the vans. NEW yORK — On the road and in financial markets, it pays to ask somebody with a good sense of direction.
Two years ago, most of Wall Street’s economists believed interest rates had bottomed out. But not Priya Misra, a top investment strategist at Bank of America Merrill Lynch.
She was one of few to argue that the sputtering U.S. economy and the European debt crisis would knock long-term interest rates to record lows in 2011.
“I was called quite crazy at that point,” she says.
Her forecast looks clear-sighted today: The rate on the 10-year Treasury note, an all-important anchor for mortgage rates and other loans, seems stuck under a historically low 2 percent.
So what does Misra think now?
Long-term interest rates will creep higher, she says, as the economy gradually gains strength. The wild card is Washington, where talks are under way to avert tax increases and government spending cuts scheduled to start in January.
Most on Wall Street are confident that congressional Republicans and the White House will stave off the full “fiscal cliff” because the stakes are so high.
Economists say the tax hikes and spending cuts could trigger a recession early next year.
“Our assumption is that a deal will get done,” Misra says. If the two sides fail to strike a bargain, “politicians know that the markets will take it very badly and blame Washington for it.”
Confidence in a deal may be shaken, pushing Treasury yields lower, if the talks drag on too long. Ethan Harris, Bank of America’s chief U.S. economist, says it looks increasingly likely that budget negotiations will run into the new year.
If that happens, it may take the financial markets to force Congress to compromise.
“Congress and the president have given themselves way too much to do in way too little time,” Harris says. “Something has to slap Washington in the face, and it’ll be the stock market.”
Why not the bond market? A fight over a government’s budgets and debt might be expected to send investors fleeing from its bonds, causing prices to fall and yields, which reflect the government’s borrowing rate, to climb.
Battles over budgets in Spain and Italy, for instance, regularly cause those countries’ borrowing rates to jump. In the United States, traders say a brawl in Washington would have the opposite effect.
That’s because rates are also a barometer of worry. When the world economy appears in danger, banks and big investors hide money in Treasurys, ignoring mounting U.S. government debt because they see this country, the world’s largest economy, as a trustworthy borrower.
Today, the economy is healthier than it was two years ago, when Misra made her prescient prediction about record-low interest rates.
But a hard enough blow could still send it into a recession. The biggest difference now is that Misra and the rest of the Bank of America strategists think the biggest threat comes from Washington, not Europe.
It’s a widely shared view across Wall Street. As they lay out predictions for next year, bankers and money managers paint a mostly sunny picture.