GM Exec Rips Into Proposed Change in U.S. Fuel Economy Rules

DETROIT – A proposal to increase the U.S. fuel economy standards would force Detroit-based automakers market to "hand over" the market for trucks and sport utility vehicles to Japanese manufacturers, a senior General Motors Corp. (GM) executive said.

Bob Lutz, GM's vice-chairman and the head of the company's global product development team, said the proposed changes to the government's Corporate Average Fuel Economy (CAFE) standards would represent an unfair burden on the traditional Big Three automakers.

"For one thing, it puts us, the domestic manufacturers, at odds with the desires of most of our customers, namely larger vehicles," Lutz said in a year-end posting on a Web site maintained by GM.

He added: "That effectively hands the truck and SUV market over to the imports, particularly the Japanese, who have earned years of accumulated credits from their fleets of formerly very small cars."

Lutz, a long-time critic of government fuel economy regulations, compared the attempt to force carmakers to sell smaller vehicles to "fighting the nation's obesity problem by forcing clothing manufacturers to sell garments only in small sizes."

A group called the Energy Security Leadership Council, which includes more than a dozen prominent U.S. executives and retired military officers, issued a report earlier this month calling on the U.S. Congress to take steps reduce the reliance on imported oil.

The group called for tougher fuel economy regulation, including a 4 percent annual increase in CAFE standards, which have been held essentially flat for the past decade.

In a related move, the Consumer Federation of America released a study last month showing that nine of 13 major automakers had a fleetwide average fuel economy performance that was lower in 2005 than it had been a decade ago.

Auto executives have argued that the industry's flat overall fuel economy in recent years reflects the strong preference for trucks and SUVs by American drivers, a point Lutz made in his Internet posting.

"As long as (gas) is around $2 per gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all," he said. "Forcing us to alter the fleets to hit some theoretical average won't change what consumers want, or what they'll buy."

GM said last month that it would launch an electric hybrid vehicle, a step many environmentalists have hailed as a way to reduce both oil consumption and greenhouse gas emissions.

Lutz said GM would provide more details on its development efforts in that area at the Detroit Auto Show in early January, but he said much of the available technology to improve gas mileage was already on the road.

"There is no technological bag of tricks that enable much better fuel economy than we have today," he said. "Despite what the alarmists may think, we don't have any magic 100-mpg carburetor that we're holding back because we're in bed with the oil companies."

The U.S. CAFE standard, which applies only an average across the fleet of vehicles, is currently 27.5 miles per gallon for cars and 20.7 miles per gallon for trucks and SUVs weighing less than 8,500 pounds.

Under the 30-year-old law, automakers face fines for failing to make the average fleet standard. Automakers can also earn CAFE "credits" to offset shortfalls in future years, a situation that applies to Japan's Toyota Motor Corp. and Honda Motor Co.