Auto Execs: Don't Pump Up Fuel Standards

Chrysler Group Chief Executive Officer Tom LaSorda discusses problems facing the auto industry, Wednesday, June 6, 2007 on Capitol Hill in Washington. (AP Photo/Dennis Cook)
AP Photo/Dennis Cook
The heads of Detroit's auto industry asked Congress on Wednesday to reconsider a proposal to increase fuel standards that the automakers say could hurt their industry.

The leaders of General Motors, Ford and the Chrysler Group discussed the impact of health care, trade and energy policies on their companies, and asked House and Senate leaders to look at alternatives to a proposed overhaul of Corporate Average Fuel Economy standards for vehicles.

During a luncheon with Senate Democrats, it was evident they face hurdles. Sen. Byron Dorgan, D-N.D., noted the industry had resisted past increases and was now running advertising saying a Senate proposal would "take your pickup truck away."

"I think the issue is over — I think you've lost that issue. I think your position is yesterday forever," Dorgan told the executives. "I think the Congress is moving on, and you're going to have increased efficiency requirements."

Rick Wagoner, General Motors Corp.'s chairman and chief executive, said the fuel economy program, developed in the mid-1970s, had failed to meet its goal of reducing gasoline consumption and oil imports. The country would be better off developing alternative fuels and advanced batteries for plug-in hybrids and electric vehicles, he said.

"Our only hope is that the policies we pursue in the next 10, 20, 30 years, I hope that we end up with better results," Wagoner said, adding, "We would like to work with you on it."

Wagoner said some of the proposals "look like a stretch and look tough" and others "don't look achievable."

Senate Majority Leader Harry Reid, D-Nev., said the industry had expressed a willingness to support some type of increase. "Whether it's enough, we'll find out. But at least it's a start," he said.

Next week, the Senate is expected to begin considering a proposal to raise CAFE standards to a fleet average of 35 miles per gallon for a manufacturer's cars and trucks by 2020, an increase of about 10 mpg over current levels. From 2020 to 2030, the auto industry would face 4 percent annual increases.

Attempts to raise fuel economy standards have made little progress in the past 20 years. A manufacturer's fleet of passenger cars is required to get an average of 27.5 mpg for any given model year, while a manufacturer's SUVs, pickup trucks and vans must get an average of 22.2 mpg. That's a combined average of about 25 mpg.

Auto industry officials have called the Senate bill unworkable and would prefer that the Transportation Department implement any increases. But they concede that Congress probably will impose higher standards this year as consumers deal with $3-plus gasoline prices and remain worried about global warming.

Ford Motor Co. CEO Alan Mulally said the companies had made "tremendous progress" on improving vehicle fuel economy and they were "absolutely committed to increasing fuel efficiency."

During private discussions with congressional leaders and members of Michigan's delegation, the automakers spoke bluntly in describing the Senate bill's negative consequences on their companies' future.

"They laid out the numbers, and the numbers that were in the Commerce bill, they said, would destroy the domestic auto industry," said Sen. John Ensign, R-Nev.

Rep. Mike Rogers, R-Mich., said two of the executives called the current plan "impossible" and would force them "to build cars that haven't been selling well to a public that isn't interested in buying them."

Environmentalists contend automakers are returning to their roots of opposing fuel economy increases, concerned that a compromise could jeopardize any significant reductions in gas consumption. They cite advertising from a trade group that represents the three companies, Toyota Motor Corp. and others that said the Senate plan would force them to limit vehicle options.

"The question is no longer whether Congress will act on fuel economy, but whether what it passes will mean anything," said Kevin Curtis of the National Environmental Trust.

Michigan's two Democratic senators, Carl Levin and Debbie Stabenow, are working on an alternative that would direct regulators to improve standards to 36 miles per gallon for cars by 2022 and 30 mpg for pickup trucks, sport utility vehicles and vans by 2025. Levin said it would offer "significant incentives" for the industry to develop new technologies.