Interpretation ID: nht90-2.70

TYPE: Interpretation-NHTSA

DATE: June 1, 1990

FROM: William F. Canever -- Staff Attorney, Office of the General Counsel, Ford Motor Company

TO: Stephen P. Wood -- Acting Chief Counsel, NHTSA

TITLE: None

ATTACHMT: Attached to letter dated 8-1-90 from K. DeMeter to W.F. Canever; Also attached to letter dated 10-22-90 from P.J. Rice to W.F. Canever (A36; Sec. 501(8); Sec. 501(12)

TEXT:

You have requested information regarding Ford Motor Company's interest in Jaguar plc, and our intentions with regard to filing the Final 1989 Model Year Report for Ford and Jaguar.

We intend to file a combined 1989 report for Ford and Jaguar because Ford controlled the import of Ford vehicles during model year 1989. Having first obtained the agreement of the Board of Directors of Jaguar to recommend-the offer, Ford Motor Company, Ltd., a wholly-owned subsidiary of Ford Motor Company, publicly announced its tender offer for Jaguar shares on November 2, 1989. The offer document, which constituted the formal legal offer, was mailed on November 8. After over 50 percent of Jaguar st ock had been tendered, Ford declared the tender offer "unconditional" on December 10, 1989. Thus, Ford gained controlling interest in Jaguar and the importer of Jaguar vehicles, and under provisions of the CAFE laws, Ford became the manufacturer of Jagu ar vehicles imported during the 1989 model year and therefore these vehicles must be combined for purposes of calculating 1989 model year corporate average fuel economy levels.

During the period of negotiation, tender offer, and acceptance, and continuing through the end of calendar year 1989, Ford was manufacturing 1989 model year vehicles. Ford, by virtue of its acquired interest in Jaguar and the importer of Jaguar vehicles , was the manufacturer for CAFE calculation purposes of Jaguar vehicles imported into the United States customs territory during that period of time. Additionally, Ford's 1989 model year had not closed at the time of acquisition because Ford was the man ufacturer, for CAFE calculation purposes, of certain 1989 Aston Martin vehicles that were being imported into the United States through calendar year end 1989.

Because Ford controlled Jaguar and the importer of and Jaguar vehicles prior to the end of the 1989 model year, and because fuel economy standards apply to particular model years as a whole and not to separate parts of a model year, all Ford and Jaguar v ehicles produced and imported for model year 1989 should be placed in Ford's fleet. This treatment is consistent with that accorded Chrysler and AMC for model year 1987, the year Chrysler acquired AMC, as outlined in your letter of April 4, 1990 to Lewi s Goldfarb.

Therefore, Ford will file its Final 1989 Model Year Report with the Jaguar vehicles included in its import CAFE fleet. Because we anticipate that Ford and the importer of Jaguar vehicles will jointly earn credits in 1989, we may, at some future date, fi le a carryback plan to cover Jaguar's

shortfall for model years 1986 through 1988 and to recover civil penalties paid (see, for example, letter dated March 21, 1990 from Jaguar Ltd.). Again, this is consistent with the treatment accorded CAFE credits in the Chrysler/AMC situation.

If you have any further questions or concerns, please do not hesitate to contact this office. As we discussed, we will not file our Final 1989 Model Year Report until you have had an opportunity to review and respond to this information.