Carmakers cave to Obama's rules

It used to be that the auto companies, with input from their customers, determined what kinds of cars and trucks Americans could buy.

Those days effectively ended July 29 when, with scarcely a whimper of opposition, the U.S. auto industry signed up for federal fuel economy mandates that will radically change the face of personal transportation in this country.

By endorsing an Obama administration rule calling for a vehicle average of 54.5 miles per gallon by 2025, the industry has signaled that nearly every vehicle it sells by 2025 will be powered by batteries, hybrid motors or perhaps fuel cells...

Car lovers can kiss the V-8 (and even the V-6) goodbye.

If there was ever any doubt, this should make it clear that government — along with its allies in the environmental lobby — is in the saddle when it comes to the direction of the auto business.

It also means the billions of dollars to be invested by the industry in the foreseeable future will be spent in a wild scramble to comply with the new mandates.

Like the fuel economy battle they faced two years ago, the companies were threatened with even more drastic measures if California and the environmental groups had their way. Again, they opted for a consistent federal rule rather than a patchwork of different standards in different states that would have made compliance impossible.

Still, many Washington observers were surprised at how little opposition the industry showed in the face of such aggressive regulation. The Auto Alliance, the industry's trade association in Washington, ran radio ads in some states emphasizing how the standards would cost jobs, but pulled them quickly when elected officials from the states voiced their discomfort.

As with every fuel economy battle over the past 30 years, there were details negotiated by the companies to make the standards more palatable. In the early years of the program (2017-2021), light trucks get a fuel economy break compared to passenger cars. Certain environmentally friendly air-conditioning systems are worth credits to the companies that use them. And there is a mid-term review of the program to assure it's working.

The companies will tell you provisions like this are important for compliance — and they are. The much larger issue, however, is whether the millions of smaller, lighter and less powerful vehicles to be built over the next decade will appeal to consumers. Will they be safe? Will the new technology work? What does a major shift like this mean in terms of jobs and incomes, particularly in Detroit and the rest of the Midwest?

And, is this the best time to burden this fragile industry with such major changes?

The new rules, the administration says yet again, will save consumers money, require less imported oil and save jobs.

They are probably wrong on all counts. The billions the companies are investing to meet the mandates will be passed to consumers in the form of higher sticker prices. History has shown that more efficient vehicles are generally driven more miles, therefore they use more gasoline. Unless we decide to drill for more oil within our national boundaries, it's hard to see how oil imports will drop.

And, as in virtually all of its public pronouncements from health care to ozone control to vehicle fuel economy, this administration says its proposals will save jobs, when all of the economic facts strongly suggest just the opposite.

The industry's critics will say this day was coming because of the intransigent ways of the companies. If this is so, how do you explain the dozens of high-mileage cars and SUVs that are available now? Indeed, by more than doubling the efficiency of its products, the companies have done better than any other major U.S. industry.

More serious are the claims by the anti-auto crowd in Washington that the industry's support for the standards really shows the companies are in agreement with the coalition of government types and environmentalists that drove home the rules.

Auto engineers say the difference between a 30-mpg car and a 50-mpg car is vast. The more efficient car requires thousands of new, lightweight components, costly high-strength alloys, tires of less rolling resistance and high-tech powerplants that run on electricity rather than fossil fuels.

This is a mighty challenge. But the industry has mounted the tiger. Here's hoping it survives the ride.

William Noack is a retired GM executive and writes about regulatory issues.

Source: William H. Noack, The Detroit News