Auto Dealers, Congress Meet for Sound Fuel Economy Hike

By Ally Wahlberg

In July 17, new car and truck dealers from across the country discussed with Members of the House of Representatives their efforts to perform sound hike in the national Corporate Average Fuel Economy (CAFE) standard. Dealers were urging their Representatives to support a bill, H.R. 2927 -- the Hill-Terry CAFE alternative, which would increase fuel economy 30 to 40 percent over the next 15 years.

The talk highlighted that consumers will ultimately determine the success or failure of any efforts of the government to modify fuel economy standards.

NADA Chairman Dale Willey said that there is a very thin line between directing more fuel economy and meeting consumer needs. According to him, it does not mean that consumers will buy these vehicles just because Congress sets a ridiculous CAFE standard. He added that if the consumers cannot get the vehicle that meets their needs, they will keep the ones they have, and that would defeat the intention of increasing fuel economy.

As regards House action on fuel economy expected as soon as next week, House Speaker Nancy Pelosi (D-Calif.) and other lawmakers have stated publicly that they are supporting the more severe CAFE jump approved by the Senate in June, wherein a 35 mpg is minimum standard for combined car/truck. Automakers would be forced to dramatically trim down the sizes of their vehicles to those that carry less cargo, fewer people, and compromise safety. This would be the coarse just to meet the harsh Senate standard and other more radical proposals. These idealistic standards would greatly increase vehicle prices as new fuel saving technologies, such as hybrids or diesels, would add from $2,000-$5,000 to the cost of a vehicle; or simply totally eliminate certain models.

Willey said that a harder push on an arbitrary CAFE standard and an arbitrary starting date would result to a bigger risk of manufacturing vehicles that conflict with consumer demand rather than complementing or attaching consumer demand.

The Hill-Terry CAFE alternative increases current standards by Model Year 2022 form 32 to 35 mpg. Not like the Senate package, the Hill-Terry bill allows separate attribute standards for different classes of vehicles, such as cars, trucks and SUVs. These separate attribute standards protect the heterogeneity in vehicles that American consumers demand. The measure provides automakers ample lead-time to develop the technology needed in order to meet the new standards, and also balances fuel-economy hikes with vehicle diversity, safety concerns and affordability.

We will see how Honda oil pan maker, will react to the results of the talk, since Honda is one of the makers of fuel efficient cars in the market.

Senate Fuel Bill Would ‘Kill' Michigan

By Anthony Fontanelle

Automakers and Michigan lawmakers were regrouping Friday in the wake of the approval of a Senate bill that increases corporate average fuel economy mandates by 40 percent by 2025.
The passage of the Senate bill would gravely injure Detroit automakers. This is why the automakers had lobbied hard against the new fuel mandates. They had supported a compromise proposed by Michigan Sen. Carl Levin, D-Detroit, Mark Pryor, D-Ark., and Christopher Bond, R-Mo., among others, that would have raised CAFE rules, but less onerously than the Senate bill.

Nearly the whole Michigan congressional delegation earlier met to tackle how to continue with the struggle. "The bill would mean the death of Michigan," said U.S. Rep. Mike Rogers, D-Brighton. "We owe it to a lot of families who rely on the auto industry to get this right." Added Rep. Bart Stupak, D-Menominee: "You think things are bad now in Michigan? You haven't seen anything yet if that bill became law." Rogers and Stupak said that automakers need to emphasize their advanced technology efforts and push for more assistance to make vehicles like the Chevy Volt a reality.

But Sen. Majority Leader Harry Reid, fuming like Eagle spark plugs, said that senators did not find automakers credible for they have "misrepresented the facts" at time. "We don't believe you anymore,'" Reid said. "The answer is we've had enough. It's time the American automobile manufacturers join with the rest of the world in recognizing that people want to buy more fuel efficient cars."

Reid said that he had spoken to House Speaker Nancy Pelosi, who told him fuel economy legislation would be passed "in the near future." Automakers now are anxious that the fuel bill may be on a much faster track than previously thought. But Pelosi meant September by the words "near future," said spokesman Brendan Daley.

The House Energy and Commerce Committee, led by U.S. Rep. John Dingell, D-Dearborn, was not expected to take up the fuel economy provisions until September. Dingell said that he was against accelerating consideration. I am not sympathetic to that, he added. Dingell met with Pelosi on the house floor Friday and had a "good conversation," said Daly. “Pelosi and Dingell are to meet again on Monday.”

Senate Democrats held a press conference yesterday to "take a bow" in the wake of the conquest. The mandate, which requires automakers to raise fuel economy to a fleet average of 35 miles per gallon for passenger cars and light trucks combined, was added to a broad energy bill the Senate approved. Senators have turned down a less stringent fuel proposal by Levin and others that would have required 36 miles per gallon for passenger cars by 2022 and 30 miles per gallon for light trucks by 2025.

Dave McCurdy, the president and CEO of the Alliance of Automobile Manufacturers, the trade group that represents the Detroit Three, Toyota and BMW among nine automakers, offered an assuaging statement. "Automakers support improving national fuel economy standards," McCurdy said. "This is a long process, and we are continuing to work constructively to develop reasonable fuel economy standards that are affordable and preserve the cars and light trucks that farmers, tradesmen, business owners, outdoor enthusiasts and families need every day."

General Motors Corp. spokesman Greg Martin expressed the automaker's disappointment. "In their rush to do something, Congress should take the same oath as doctors: 'First, do no harm,'" Martin said. "We'll continue to press our case hard that we can work with them to get improved fuel economy levels without the unintended costs to the industry and consumers." Ford and Chrysler as well as other Japanese automakers expressed the same views.

Auto Lobby Hits The Senate

By Mike Bartley

Auto executives and dealers aggressively lobbied undecided senators last Tuesday with a significant vote on increasing fuel economy regulations expected as early as today. The act is expected to bolster support for a compromise proposal that would mitigate legislation moving through the Senate that calls for noteworthy increases in the Corporate Average Fuel Economy or CAFÉ.

A vote on the compromise mileage bill sponsored by a half-dozen lawmakers spearheaded by Sens. Carl Levin, D-Detroit, Mark Pryor, D-Ark., and Kit Bond, R-Mo., is expected today, despite the fact that some supporters were pushing for more time to round up votes or strike a compromise.

The Legislature appears determined to produce a more stringent fuel economy mandate because of the growing concerns about global warming and dependence on foreign oil. The current Senate fuel economy proposal, part of an intensive energy bill, calls for increasing standards 40 percent to 35 miles per gallon for cars and trucks combined by 2020, followed by four percent annual raises through 2030 to 52 mpg. Detroit's automakers said that the bill would cripple the industry. But this stand is dismissed by supporters of the bill and environmentalists as alarmist.

The Levin-Pryor-Bond compromise bill supported by automakers would set minimum CAFE requirements at 36 mpg for passenger cars by 2022 and 30 mpg for light trucks by 2025. Compared to the Senate bill, the compromise proposal is far more lenient. While automakers, including the Toyota Motor Corp., said that it would be difficult and costly to meet that standard, they are reluctantly backing it.

Tom LaSorda, the CEO of DaimlerChrysler AG's Chrysler Group, made a surprise visit last Tuesday to Capitol Hill. LaSorda joined Ford Motor Co.'s president of the Americas Mark Fields; General Motors Corp. sales chief Mark LaNeve; GM environmental executive Beth Lowery; and dozens of auto dealers. "The bottom line is we are counting votes," said Sen. Debbie Stabenow, D-Lansing, also a sponsor of the compromise bill. "It is very, very close."

Even Steve Feinberg, the head of the private equity firm Cerberus Capital Management LP, met with Sen. Jon Tester, D-Mont. last week to solicit timely support for the compromise bill. "They talked about CAFE," said Matt McKenna, Tester's spokesman. Feinberg was joined by a Cerberus lobbyist, former Louisiana Sen. John Breaux.

Chrysler may have the most to lose from a stringent mandate because its lineup is 70 percent trucks. In a letter to employees last week, LaSorda said that the alternative legislation "will cost our company $11.2 billion over the first five years," but that would be "far less than the tougher bill." The current energy bill "puts us out of business," LaSorda wrote. "For the first five years alone, it's estimated to add up to a staggering $6,700, almost a 40 percent increase, to the cost of every Chrysler vehicle."

Auto executives zeroed in on undecided senators such as Tester, Mary Landrieu, D-La., and David Vitter, R-La. "Frankly, if the head of GM wanted a meeting this week he probably wouldn't have gotten it," said McKenna, a spokesman for Tester. "But since they were with Montana GM dealers, they got in the door."

LaNeve said that his meetings with senators, including Tester, Landrieu and Vitter, went well. "We need to be better on CAFE," he said. "We need it done in a reasonable way that still provides customer choice. You can't provide towing capability, people-hauling capability, off-road capability off a vehicle built on a car chassis."

The compromise bill got solid support among Republicans. They said that the compromise bill has gained support, but were not confident. The events unfold like Lebra and more are expected to be unraveled in the coming weeks.

Senators Offer New Fuel Economy Proposal

By Anthony Fontanelle

Senators backing the automakers drafted a new compromise fuel economy proposal late last Wednesday in an effort to avoid a massive fuel economy raise from being approved.
Michigan Democrats Carl Levin and Debbie Stabenow said that they offered a new proposal to Sen. Dianne Feinstein, D-Calif. - a key supporter of a Senate energy bill that calls for notable increases in corporate average fuel economy (CAFÉ). Levin and Stabenow declined to tackle the details of their new plan. But they said that they would vote to block the full energy bill if a compromise was not reached. "We're going to run the numbers on it tonight," Feinstein said.

Earlier, supporters backing the energy bill agreed to scale back CAFE increases after 2020 - a move automakers called inadequate. The current Senate fuel bill requires automakers to average 35 miles per gallon for cars and trucks combined by 2020 and then face annual four percent increases through 2030, ending up with a 52 mpg standard. Automakers have called the proposed standards "wildly extreme," adding that it would cost them tens of billions of dollars to comply.

A bunch of senators, including Levin and Stabenow, had proposed the "Pryor-Bond-Levin" amendment for its sponsors, which would increase passenger car CAFE mandates to 36 mpg by 2022 and trucks to 30 mpg by 2025. Lawmakers are now trying to come up with an alternative that would mend the Senate fuel bill and the Pryor-Bond-Levin proposal, which had won the support of automakers.

"Any fuel economy increase has to be responsible, and it's got to comprehend the fundamental differences between cars and light trucks," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, which represents Detroit's Big Three, the Toyota Motor Corp. and BMW among others.

In addition to Levin's revised compromise, a group of senators led by Ted Stevens, R-Alaska, filed a 38-page amendment to the energy bill that includes slashing the four percent increases after 2020. The said amendment also would get rid of a requirement that automakers make 80 percent of their fleet capable of running on flexible fuels like E85 ethanol by 2015. The Nissan Motor Co. wanted that provision. The same would also benefit the Saturn fuel filter and auto parts in case GM pushes its plan to produce flex-fuel vehicles.

The Pryor-Bond-Levin proposal requires 50 percent of vehicles to run on alternative fuels and allows automakers to count hybrids as alternative vehicles. But the Pryor-Bond-Levin bill appears in grave trouble and Nissan's opposition to key aspects of it may be one reason it fails, officials from other automakers said. Both Tennessee senators intended to vote against the alternative and both Mississippi senators were leaning against it. Nissan has a plant in Canton, Miss., where it builds the Altima and the Quest.

On Wednesday, Levin met with Sen. Mark Pryor, D-Ark. to try to strike a further compromise. "We're putting all the options on the table and talking about them as they come up to see if we find something that people can live with," Pryor said in an interview late Wednesday. "It's very close, and both sides agree the outcome is uncertain."

Automakers were not pacified by the Stevens amendment. "This is a ploy to show, 'Look how generous we are.' The bill is still unattainable," said one senior domestic auto official. Senate Majority Leader Harry Reid, D-Nev., referring to Detroit automakers, has this to say: "The time has come to speak for the American people, not three car manufacturers that are closing plants and laying off people."

Sen. Barbara Boxer, D-Calif., said talks were under way to "meld the two approaches" to produce efficient fuel mandate.