January 7, 2016
It’s been a crazy week for the markets, and unfortunately we’re only at the halfway mark. On Monday, China halted trading of trading of its major stock indices after a whopping 7% decline. On Tuesday, North Korea claimed to have successfully tested its first hydrogen bomb—and the markets did not respond well. On Wednesday, oil prices fell 5.5%, the lowest level in 11 years. At this rate, no one’s looking forward to the news that Thursday and Friday might bring.
But Ford Motor Company CEO Mark Fields isn’t sweating it. He thinks that gas prices will continue to fall this year, but he’s making sure Ford is prepared for when they inevitably rise again. “Our long-term view is that the price of a barrel of oil will go up and gas will go up, and that’s why we’re spending so much money on investing in fuel-efficient and electrified vehicles,” he tells Yahoo Finance. While he’s seen consumers gravitate towards crossover vehicles and SUVs, he believes that drivers have long memories and are still interested in purchasing fuel-efficient cars.
If oil prices continue to fall, Fields does fear that a disruption in the industry will hurt pickup truck sales. “The oil and gas industry buys a lot of pickup trucks and things of that nature,” he says.
Fields predicts that 2016 will be a better year in China than 2015. This is in part because of a reduction in the consumption tax on vehicles, which supports auto sales.
China is a key market for Ford—it’s projected to have sold more than 1 million cars there last year. And the redesigned and rebranded Lincoln car was designed to appeal to an Asian market. So is Fields worried about a potential economic downturn? “We did see a slowdown in China last year during the midsummer months when the economy cooled down,” he admits. “But we have to put this in perspective. China is going through the transition from an investment and industry-led economy to a consumer economy.” He expects there will be volatility, but says Ford has a lot of confidence in China’s economy.