Auto Industry Pushes Back On Higher Fuel-Efficiency Standards

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new carsTwo years after President Barack Obama and the country’s car makers embraced ambitious new gas mileage standards, the U.S. auto industry — rebounding after a massive federal bailout — is pushing back hard against higher efficiency targets for the next generation of vehicles.

An advertising blitz in seven politically important states starting Thursday will feature warnings against overzealous government regulation and the threat of worker layoffs.

“Some in Washington have suggested as much as a 100 percent increase over current standards,” the ads say. “Imagine how that would affect our state. Families would be hit with higher car prices. Small businesses dependent on vans, SUVs or pickups would face limited vehicle choice. And even the government is predicting a drop in auto sales from what amounts to an electric vehicle mandate.”

The industry campaign comes as the White House and automakers led by Detroit’s Big Three — General Motors Co., Ford Motor Co. and Chrysler Group LLC — are negotiating the outlines of new fuel-efficiency standards for cars and light trucks to be built starting in 2017.

With consumer purchases of more fuel-efficient vehicles rising, automakers agree that their future viability hinges on producing more of them. But they say they are concerned about the pace of the transition and possible sales losses if compelled to move too far, too fast in the new direction.

Industry resistance comes after a period of relative accord between the two sides. In May 2009, rocked by economic woes and legal defeats, the chief executives of the nation’s major car companies stood with Obama in the White House Rose Garden in an unprecedented show of unity over significant increases to car and truck fuel efficiency.

What’s changed is part politics and part economics.

Bolstered by government support during the recession, the companies have largely returned to profitability and — even as individual automakers express support for sharply improved fuel efficiency — the industry as a whole has returned to its long-standing opposition to government regulation and mandates.

And in economic terms, they are worried about being saddled with tough efficiency standards that might turn out to be out of step with consumer preferences — especially since it takes years to develop new vehicles.

Federal fuel-efficiency standards apply to a manufacturer’s entire output, not to each individual vehicle. Makers can continue to produce less-efficient vehicles, but must make sure they sell enough of the more efficient units to make the total fleet average meet the overall fuel standard.

While fuel-efficient cars are becoming more popular, the top-selling vehicles in America remain gas-hungry trucks. Even with gas prices remaining high, studies have shown that many car buyers still prefer size and horsepower to saving money at the pump.

“You get into trouble when consumers want to buy one thing and what the fuel efficiency standard said is to make another thing,” said Jeremy Anwyl, chief executive of the consumer site Edmunds.com.

The White House declined to comment on the current negotiations, which include the car companies, the State of California and other stakeholders, saying only that they are “constructive.”

The most ambitious proposal on the table calls for the American car and truck fleet to average 56 miles per gallon by 2025. While the industry has not publicly offered a counterproposal, it seeks fuel-efficiency standards in the low to mid-40s, according to sources close to the talks, who requested anonymity because they are not authorized to discuss the negotiations publicly.

Automakers would also like the bar set lower for light trucks, a category that includes minivans and SUVs. The standards that both sides agreed to in 2009 would increase average fuel efficiency for cars to about 34 miles per gallon by 2016.

“Ultimately, this may come down to politics,” said Roland Hwang, transportation program director for the Natural Resources Defense Council. “I think everyone understands that higher fuel-economy standards are hugely popular with the public at a time of higher gasoline prices.”

The industry says sharply higher standards would lead to layoffs, price increases of up to $10,000 per vehicle, diminished safety and the demise of some vehicle lines.

A study by the University of Michigan Transportation Research Institute, on the other hand, concluded that car makers’ profits would rise as a result of developing and producing innovative new vehicles. That would suggest jobs would not necessarily be lost. And savings on gasoline would offset higher car purchase prices, according to the Environmental Protection Administration.

Some industry experts say that the long lead time of the proposed new standards would give car makers ample opportunity to meet a more ambitious fuel efficiency target.

“Developing technology, shaping consumer attitudes, fuel prices going up doesn’t happen overnight but over 10 or 15 years,” Bruce M. Belzowski, assistant research scientist at the University of Michigan’s Transportation Research Institute, said. “We’ll always have trucks in the U.S. because people need them for work.”

The United Auto Workers union, which for years had echoed the car companies’ assertions that significant increases in fuel efficiency would destroy jobs, now backs the manufacture of fuel-efficient vehicles as a way to keep factories open.

“President Obama saved the auto industry. He doesn’t want to jeopardize that,” UAW President Bob King said. “To direct this kind of criticism at the administration after what they’ve done is irresponsible.”

Starting Thursday morning, the Alliance of Automobile Manufacturers will begin airing 60-second radio ads in the District of Columbia and Michigan, Ohio, Indiana, Illinois, Pennsylvania, North Carolina and Missouri.

The alliance said it plans to expand the campaign to other states.

Source: McClatchy-Tribune Information Services.