Ford CEO says company can handle high gas prices

Associated Press (Washington, D.C.) - Ford CEO Alan Mulally said Thursday his company is better positioned to withstand rising gasoline prices compared with three years ago when $4 gas battered the auto industry.

Ford's top executive said the company learned lessons from 2008 and its revamped vehicle lineup of small and mid-size cars would appeal to a broader number of customers as gas prices climb.

The national average for a gallon of gas has increased more than 40 cents over the past three weeks to about $3.50. Many drivers on the West Coast are paying close to $4 a gallon or more.

"We thought this was going to happen. We didn't think it was going to happen as fast as it is, but we feel like we're positioned with the right product line now," Mulally said. "We've got the best smaller and medium-size vehicles we have ever had."

Mulally on Thursday met with Rep. Dave Camp, R-Mich., who leads the House Ways and Means Committee and was meeting Friday with other business, labor and government leaders as part of an Obama administration export advisory council.

Mulally said three years ago the company's vehicle lineup relied heavily on pickup trucks and sport utility vehicles but has since shifted to produce more fuel-efficient small cars like the Fiesta and Focus.

He cautioned the auto industry against boosting incentives to sell new cars. Auto sales rose 27 percent in February but many automakers offered incentives such as zero-percent financing or additional discounts to spur sales.

In the past the industry built too many vehicles compared with demand and then was forced to offer generous incentives to sell them, he said, adding "it's very destructive business-wise and it's one of the main reasons that the automobile industry in the United States got into trouble in the past."

Raising incentives are "not part of Ford's plan and we're not going to operate that way," he said.

Ford has pushed for greater access to the South Korean auto market. Mulally said the company was "thrilled with the outcome" of trade talks with South Korea last year and remained optimistic that Congress would approve the pact, which would help open Korea's auto market. Lawmakers have urged the Obama administration to package the South Korea deal with pending trade agreements with Colombia and Panama.