Ford CEO calls Donald Trump’s fuel efficiency reset a ‘victory’
In an Oval Office meeting, Ford CEO Jim Farley spoke to thank President Donald Trump for his proposal to rollback Biden-era fuel efficiency standards.
- President Trump suggested Detroit automakers consider making small, inexpensive cars similar to those popular in Japan.
- Industry analysts believe the idea is unlikely to happen due to low consumer demand and safety standard challenges.
- American car buyers have historically prioritized larger vehicles like SUVs and trucks over small cars.
The auto executives representing the Detroit Three stood in the Oval Office stone-faced, softly nodding as President Donald Trump proposed on Dec. 3 that they start thinking about making tiny, inexpensive cars for the U.S. market that are similar to ones popular in Japan.
It’s an idea that likely will never happen, auto industry analysts said. In part, because it’s been tried already and failed — U.S. car buyers prioritize utility over price. Plus, the cars Trump referred to would never withstand the safety standards needed to protect drivers on U.S. roads.
Trump’s raving about the small cars followed his announcement proposing to ease the stringent fuel efficiency requirements made under former President Joe Biden’s administration. Trump followed his praise and endorsement of tiny cars by then heaping praise on Ford Motor’s full-size F-150 pickup, a vehicle the president also admires.
“If you go to Japan, where I just left, if you go to South Korea, Malaysia and other countries, they have a very small car, sort of like the Beetle used to be with Volkswagen,” Trump said, as he sat at his desk, flanked by dignitaries including Ford CEO Jim Farley, Stellantis CEO Antonio Filosa and General Motors Orion Assembly Plant Manager John Urbanic. GM CEO Mary Barra could not attend due to a prior engagement.
“They’re very small, they’re really cute,” Trump went on to say about the cars. “And I said, ‘How would that do in this country?’ Everyone seems to think good, but you’re not allowed to build them. I’ve authorized the secretary to immediately approve the production of those cars.”
Trump went on to praise the Japanese carmakers for doing “a beautiful job” of making small cars and then added, “but we’re not allowed to make them in this country and I think we’re going to do very well with those cars, so we’re going to approve those cars.”
At that point, Secretary of Transportation Sean Duffy said he has cleared the regulations so that car companies can now build and sell the small cars stateside.
To be clear, carmakers are already allowed to build small cars in the United States and no regulations had to be changed.
“They really give people a chance to have a car, have a brand new car as opposed to a car that maybe isn’t so great,” Trump said. “So new car companies, start thinking about that.”
What car is Trump talking about?
First of all, auto industry analysts say small cars are allowed to be built in the United States now.
“Virtually any manufacturer could currently be making smaller cars and selling them in the U.S. so long as they can be certified to meet Federal Motor Vehicle Safety Standards,” said Michael Brooks, executive director for the Center for Auto Safety. “Trump is incorrect. There is no prohibition on U.S. or foreign manufacturers making smaller vehicles.”
Brooks said Duffy and the Department of Transportation haven’t cleared anything — no National Highway Traffic Safety Administration regulations have been changed to allow non-certifiable vehicles and no exemptions from Federal Motor Vehicle Safety Standards have been issued.
Auto industry analysts said they believe Trump was referring to Japanese “kei” cars, which are made by a variety of Japanese automakers primarily for sale in Asia.
“It is a special class of vehicle designed specifically for the Japanese market,” said Sam Abuelsamid, vice president of market research at Telemetry. “In cities like Tokyo, you generally cannot register a vehicle unless you prove you have somewhere to park it in close proximity to your residence. Kei cars get an exemption from this rule as well as various taxes.”
The vehicles have strict dimensional limits, so they all look like tiny boxes, Abuelsamid told the Detroit Free Press. But because of their shape, they are surprisingly roomy, he said, noting that his friend who is 6-foot-8 can fit comfortably in a Nissan Sakura kei car. They are also limited to a maximum of 660-cubic-centimeter engine and 64 horsepower and generally have a top speed of 87 mph, Abuelsamid said.
The maximum length of a kei vehicle is 133.9 inches and 58.3 inches wide, Abuelsamid said. So if you’re familiar with the “smart fortwo” car — which was made by Mercedes Benz and Geely, but is no longer sold in the United States — it is 106.1 inches long. The current Fiat 500e, made by Stellantis, is 143.1 inches long and 74 inches wide. The smart car was a two-seater and the Fiat has a tiny cabin that barely fits two and has “a useless back seat,” Abuelsamid said.
He said the Japanese kei cars easily fit adults front and back. The drawback is they provide little side impact crash protection, he said.
“They are indeed cute it would be great to see some of them offered for sale here,” Abuelsamid said. “Unfortunately, apart from the small niche of enthusiasts that already import older kei cars under the 25-year rule, I think the actual market for them in this country would be way too small for any automaker to make a business case to actually try to sell them here.”
Case in point: Stellantis sold just 970 models of its Fiat 500e for all of last year. By comparison, Stellantis sold 587,725 Jeep vehicles in the United States last year and 439,039 Ram pickups.
Would the Detroit 3 ever make them and sell them?
Farley and Filosa nodded politely at Trump’s suggestion they consider adding such a vehicle to their lineups.
When asked by the Detroit Free Press if the Dearborn-based automaker would actually consider building and selling such a vehicle in the United States, Ford spokesman Griffin Anderson sent this statement: “Nothing specific to share at this time, but as America’s largest auto producer — including F-Series, the best-selling vehicle in the U.S. for 43 years — we’re always looking for ways to give U.S. customers more choice and affordability in vehicles they love.”
GM spokeswoman Liz Winter said the Detroit-based automaker has a policy of not commenting on future products.
Stellantis spokeswoman Jodi Tinson emailed the following statement: “Stellantis is always looking for opportunities to adapt our product portfolio to meet our customers’ needs and give them the freedom to choose vehicles they want at prices they can afford.”
But the likelihood that these automakers would attempt to make a business case for such vehicles is nonexistent, Abuelsamid and a variety of experts interviewed by the Free Press said. That’s because the United States is a pickup and SUV nation with few people willing to take a chance driving something so small. Plus, the kei cars are not designed to meet U.S. crash standards and would have to be totally reengineered for U.S. safety requirements.
“There are rules about the protection that must be provided to vehicle occupants in various crash scenarios and that usually requires some crush space to absorb the energy before it gets transferred to vehicle occupants,” Abuelsamid said. “If a company can figure out a way to meet the occupant protection requirements in a car the size of a kei, they are free to do it.”
But given the tiny market for such a car in the U.S., no automaker is likely to spend the money to reengineer it and more importantly, to build it here, Abuelsamid said. And, by the time a manufacturer brought such a car to the states, it would likely cost about $20,000, the price for a Nissan Versa right now, and Nissan is discontinuing the Versa due to a lack of sales.
“As usual, he’s making a lot of noise about something that’s not ever going to happen,” Abuelsamid said of Trump’s idea.
Too risky for U.S. roads
In fact, Japanese and Korean brands tried to sell small cars in the U.S., but American buyers have evolved away from the Honda Fit and Kia Rio, preferring small SUVs, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.
The kei cars are even smaller than compact SUVs and would not pass U.S. occupant protection regulations, but there are no legal reasons why smaller models couldn’t be made or sold in the U.S. today, he said.
Still, Fiorani said, “The popular small cars in Japan are less than 11.5 feet long, less than 5 feet wide, and weigh just over 1 ton. Putting them on the road with 2.5-ton Ford F-150 pickups or 4.5-ton Chevrolet Silverado EVs would be a disaster, if anyone bought them.”
American car buyers don’t want them
Fiorani said there is not enough consumer demand now for the Honda N-Box or Nissan Roox for $20,000 for these manufacturers to sell them stateside, let alone produce them here.
“The original CAFE regulation was the reason why the Ford Focus, Chevrolet Cruze and Dodge Neon were produced in the first place. Small cars, sold at a loss, were produced to balance out bigger cars sold at a profit since the two sizes were averaged together,” Fiorani said. “When the calculations were changed a decade ago, the business case to make small cars was eliminated.”
Put bluntly Fiorani said: “No domestic manufacturer wants to give up space dedicated to profitable trucks to produce unprofitable small cars.”
It’s a point that Trump himself made on Dec. 3 when raving about the F-150, after pushing automakers to consider making a tiny car.
“Isn’t that a ridiculous model when you have to build two or three cars that you know you’re not going to be selling or not going to be selling for much, in order to really do something that you should have the right to do, which is make the car that you want to make and that the market wants?” Trump said. “So congratulations on the 150.”
But what about affordability?
The average transaction price for a new car is brushing up against $50,000, so don’t Americans need something nice, but inexpensive, to drive?
Jessica Caldwell, Edmunds’ head of insights, said to answer that question, one must apply a historical lens to the discussion.
“Anyone who lived through the great gas price spike in 2008 will recall the ensuing pressure placed on automakers to produce small, highly fuel-efficient vehicles,” Caldwell told the Detroit Free Press. “The industry responded and built those cars.”
But within a few years, those models were discontinued or confined to fleet sales because Americans prioritize size, cargo space and the safety of a larger vehicle above all else, Caldwell said.
“That mantra continues today and is the reason the subcompact and compact car segments are almost extinct,” Caldwell said. “American consumers have historically proven that quirky styling and extreme smallness are not desirable long-term combinations outside of niche segments.”
She said if a smaller vehicle is to succeed in this country, it has to offer utility. The Center for Auto Safety’s Brooks agreed, noting the car industry has been eliminating smaller and less expensive vehicles in favor of SUVs and other larger vehicles for decades now.
“My best guess is that neither Trump or Duffy really know what the hell they are talking about,” Brooks said. “We could have been importing, building and driving smaller and more fuel efficient vehicles for decades at this point, but the auto industry and car buyers chose to go larger, and that’s where we sit.”
Jamie L. LaReau is the senior autos writer for USA Today Co. who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
