Automakers Ask Congress to Address Fuel Efficiency Standards

WASHINGTON – The heads of the domestic auto industry pressed congressional leaders Wednesday to revisit a plan to increase fuel efficiency standards that automakers say could hurt their industry.

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 consider an alternative to a proposed overhaul of Corporate Average Fuel Economy standards for vehicles.

"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., who participated in a morning meeting with GOP leaders.

During a luncheon with Senate Democrats, General Motors Corp. chairman and chief executive Rick Wagoner said it was time to move beyond approaches like CAFE "that clearly haven't solved these critical problems." He suggested more attention on developing biofuels such as ethanol and research on advanced batteries for hybrids and electric vehicles.

Wagoner acknowledged Tuesday in Delaware that "it's very likely there will be increases in CAFE" but said the Detroit-based automaker hoped to "make sure that we also fix the real problems while we're doing that."

Next week, the Senate is expected to consider 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 2020-2030, the auto industry would face 4 percent annual increases.

Auto industry officials have called the Senate bill unworkable and resisted attempts to increase the requirements in the past. But they concede that Congress is likely to impose higher standards this year as consumers deal with $3-plus gasoline prices and remain worried about global warming. The industry executives want to help shape any new requirements.

In Washington, Wagoner was joined by Ford Motor Co. CEO Alan Mulally, DaimlerChrysler AG's Chrysler Group CEO Tom LaSorda and United Auto Workers President Ron Gettelfinger.

LaSorda said his company faced a $1,000 disadvantage per vehicle compared with Japanese competitors because of health care costs. The three companies cover more than 2 million employees, retirees and their dependents.

"American manufacturing and a key component — the automotive sector — are at a crossroads. We are either going to adjust to the realities of the global economy or we will not survive," LaSorda said.

Mulally said the nation's trade policy has hurt American manufacturers, citing "a willingness in trade negotiations to overlook or even trade off manufacturing's interests for those of other sectors that are perceived as either sacred cows or the new frontier."

But much of the private discussions were focused on fuel economy. Ensign said the auto executives said they were willing to cooperate to develop a new approach to the Senate bill, but "they also have to keep their industry alive."

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. The approach would be more palatable to the industry because it would give them more time to improve vehicle efficiency and keep separate the standards for passenger cars and light trucks.

In the House, a draft bill recently released by a committee led by Rep. John Dingell, D-Mich., would push for standards that would mirror the Levin-Stabenow approach.

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.

A trade group that represents the three companies, Toyota Motor Corp. and others has aired ads saying the Senate fuel economy proposal would hurt the industry and force them to limit vehicle options.

Environmentalists have charged automakers with returning to their roots of opposing fuel economy increases, concerned that a compromise could jeopardize any significant reductions in gas consumption.

David Friedman, research director for the clean vehicles program at the Union of Concerned Scientists, said Levin's approach would set "feeble goals and gives the automakers a free pass. We need guarantees, not promises, for cutting fuel consumption."

Manufacturing companies discussed health care, trade and energy issues during a series of meetings, organized by Stabenow. Leaders of ArvinMeritor Inc., The DuPont Co., Dow Chemical Co., Whirlpool Corp. and United States Steel Corp. attended.