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Auto Fuel Economy -- Here we go again!

Posted by: John Carey on June 19, 2007

This week, Congress is debating whether or not to mandate higher fuel economy for cars and light trucks. Predictably, the U.S. auto industry is fighting such increases tooth and nail.

“In effect, this bill would outlaw a number of engine lines and car models, including most full-size [vehicles]…,” fumes a top Chrysler executive. “It would restrict the industry to producing subcompact-size cars or even smaller ones, within 5 years.”

I hope this quote fooled you. Yes, it sounds just like the arguments

the Big Three are making now.

For instance, in an email sent to rally his employess to pressure Congress, Chrysler Group President Tom LaSorda said that the current proposal to boost average fuel ecomony to 35 mpg by 2020 would cripple the U.S. industry. It would "add up to a staggering $6,700 -- almost a 40 percent increase -- to the cost of every Chrysler vehicle," he wrote. The industry also has spent millions on ads telling consumers that such standards would take away their SUVs and pickups, and force them to drive small, unsafe cars.

But that first quote? It comes from 1974, when the average car got 14 miles per gallon, and Congress went on to enact the first CAFE (Corporate Average Fuel Economy) standards. Back then, the industry said that higher mileage was virtually impossible. It would impose huge costs and force a switch to small, unsafe cars. “If this proposal becomes law..., the largest car the industry will be selling in any volume at all will probably be smaller, lighter, and less powerful than today’s compact Chevy Nova," said GM in 1975.

We know now how wrong the industry was. The average gas mileage new cars get now is 28 mpg, double what it was in 1974. Even big powerful cars like the Chrysler 300 are rated at 27 mpg on the highway. Need a large minivan for a big family? The Honda Odyssey is rated at 27 mpg highway and 21 mpg overall. And study after study shows that further fuel economy gains are possible (even easy) at relatively low cost if engines are optimized for efficiency rather than maximum horsepower.

It's deja vu all over again. Over the years, U.S. automakers have fought every single govermnent regulation, charging that the proposed rules would be impossible or incredibly onerous to meet. Consider what Ford said in 1973 about pollution controls: “Our industry has been backed to the cliff edge of desperation, and time is running out. . . . As far as the even tougher 1976 requirements are concerned, nothing seems to describe our situation as well as: ‘... two words: IM…POSSIBLE!’ ”

Or consider what Lee Iacocca, then at Ford, told President Richard Nixon in 1971 about proposed safety rules: “[T]he shoulder harnesses, the headrests are complete wastes of money . . . and you can see that safety has really killed all of our business. We are in a downhill slide, the likes of which we have never seen in our business."

My point? Well, I'm almost embarassed to say it because it's so simple and obvious. Over and over, when Congress has tried to make cars safer, cleaner, and more fuel efficient, the U.S. auto industry has cried wolf. And every time, history has proven that their arguments were just flat wrong.

Does anyone think they still have any crediblity in the current fuel economy debate?

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BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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