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Ford CEO: CAFE distorts market

Ford Motor Co. President and Chief Executive Officer Alan Mulally said Wednesday that federal regulations to improve fuel economy will cut into automakers’ profits by pushing them to build more small cars than demand warrants.

“You’re trying to force-feed the market rather than being market driven,” he said during a panel discussion at the Center for Automotive Research Management Briefing Seminars in Traverse City.

“I’ve never seen a market-distorting policy like CAFE,” he said, referring to the Corporate Average Fuel Economy standards. He said some of the standards being discussed in Washington are not achievable under present technology.

Mulally said Ford favors higher fuel economy, energy independence and being good stewards of the environment.

“The auto industry can’t solve energy independence and it can’t solve global warming, but we absolutely want to be part of the solution,” he said.

A gasoline tax would be a more market-driven solution to solving the oil independence problem instead of CAFE, which has not worked, Mulally said.


Home sales will hit five-year low

Home sales will hit a five-year low this year, as wary lenders cut back on loans for many borrowers, a trade group for real estate agents said Wednesday.

The National Association of Realtors’ revised forecast calls for existing home sales of 6.04 million in 2007, down 6.8 percent from last year. The forecast was 1 percent lower, or 70,000 fewer homes, than July’s prediction of 6.11 million.

This year’s sales would be the lowest since 2002, when sales hit 5.63 million. Last year’s sales were 6.48 million.

Next year, the trade group expects sales to climb to 6.38 million, up slightly from the forecast it gave in July of 6.37 million.

The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well.

As delinquencies rise, lenders are reducing the availability of credit to those borrowers.

Los Angeles

Blockbuster buying Movielink

Video rental chain Blockbuster Inc. said Wednesday it is buying the digital movie download service Movielink, giving it the online foothold it has long sought to compete with rival Netflix Inc.

Terms of the deal were not disclosed.

Blockbuster, based in Dallas, said it will continue to operate Movielink as a standalone service and eventually make elements of the service available through

Movielink was launched by five studios in 2002, marking the first time that a large supply of recent, popular films was available for rental on the Internet.

A call to Santa Monica-based Movielink was not immediately returned.

The privately held service has struggled to gain popularity, even as it allowed the purchase of films and signed licensing agreements with all major studios and a large number of independent film companies.


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