Stricter mpg rules may be boon for automakers

President Barack Obama is trying to shove U.S. automakers toward the future, a high-stakes wager that could help revive the industry in the long run, experts say.

By issuing rules aimed at sharply boosting vehicle gasoline mileage and slashing greenhouse gas emissions, experts say the Obama plan is just what carmakers need given the prospect of higher gas prices and worries about global warming.

“If you look toward the future, these standards will put carmakers in a more competitive position as they address future requirements and trends,” said Douglas Allen, associate professor of management at the University of Denver’s Daniels College of Business.

At a White House ceremony Tuesday where he was flanked by top auto executives, union leaders, and environmentalists, the president said the rules would give auto companies “clear certainty” at a time when the industry is weathering a “historic crisis.”

Experts who support the plan say it will deliver needed change: Automakers will have to plow research dollars and know-how into cleaner engines, better transmissions and alternative-fuel vehicles such as hybrid and electric plug-in cars. Diesel engines also are expected to get more scrutiny and use.

The University of Denver’s Allen, who has worked in and studied the auto industry for decades, acknowledged the new rules would impose short-term pain as automakers retool factories, cars and technologies to meet the stricter requirements. But over the long term, automakers would gain, predicted Allen.

“Without these guidelines, the U.S. auto industry would come up short," he said. He said the rules clarify the road forward for car companies and remove the threat that individual states would impose a patchwork of regulations governing fuel efficiency and new vehicle carbon emissions.

Automakers, in fact, reversed decades of opposition to stricter mileage standards by supporting the administration’s new rules — likely spurred in part by the industry’s heavy reliance on bailout money from U.S. taxpayers. Auto executives, for their part, said they like the plan’s unified approach to rulemaking.

"For seven long years, there has been a debate over whether states or the federal government should regulate autos," Dave McCurdy, president of the Alliance of Automobile Manufacturers, said in a statement. "President Obama's announcement ends that old debate by starting a federal rulemaking to set a national program."

Still, some experts argue the changes amount to harmful government meddling in the auto industry when the Big Three are struggling to pay bills and consumers are avoiding new car purchases.

Chrysler LLC is in bankruptcy and General Motors Corp. may follow suit. The new plan, which will result in Americans driving smaller, more fuel-efficient cars and trucks, will cut the industry's profit margins and could weaken them further.

“Nobody makes money producing small cars in North America,” said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Toronto.

The plan’s 30 percent boost in fuel economy would translate into a 35.5 mile per gallon average for cars and light trucks in 2016, four years earlier than the existing law called for. New passenger cars sold here would need to average 39 mpg, up from the current 27.5 mpg. Light trucks, which include pickups and sport-utility vehicles, would need to average 30 mpg, up from 23.

The White House projects the plan ultimately would save 1.8 billion barrels of oil. The administration also forecasts it will cut greenhouse gas emissions by 900 million metric tons — the equivalent of taking 177 million cars off the road.

An administration official told reporters the extra cost per vehicle would amount to about $600 per car in 2016, on top of the estimated $700-per-car cost of the fleetwide corporate average fuel economy, or CAFE, standards carmakers already had to achieve by that year. The administration maintains that resulting fuel savings will offset the added cost.

MORE FROM AUTOS

Autos Section Front

IntelliDrive program blends technology, safety Chinese automaker aims to compete globally CEO lays out ambitious Chrysler road map Cars are approaching ‘auto’ pilot mode Review: Toyota Venza falls short What automakers have in store for 2010 Ford to put air bags into back seat belts Clunker deals: old Ford pickups for new ones New Dodge models part of Chrysler’s plans U.S. rips Toyota statement on floor mats Autos Section Front   Add Autos headlines to your news reader: