U.S. Gets Real on Fuel-Economy - WSJ

[Klaus]

U.S. Gets Real on Fuel-Economy

Possible Revamp Consumer Data
Is Another Wake-Up Call for Industry

March 29, 2004

Since 1985, the auto industry has made enormous advances in technology, much of it safety gear that adds weight and undercuts fuel economy. During the same period, the way Americans drive has evolved too in ways that don't promote fuel saving. Average commutes and miles driven have risen. Motorists are driving faster on open freeways, but spending more time stuck in congestion shuttling from McMansion to mega-mall in the sprawls surrounding big cities.

Should it be a big shock then that a government test scheme for measuring a new vehicle's likely fuel economy that was last revised 19 years ago appears to generate numbers out of whack with reality?

Consider that the current EPA test includes a 10-mile highway driving segment during which the average speed is 48 miles per hour. I live not far from the Ann Arbor, Mich., lab where much of this work is done. A car doing 48 miles per hour on the stretch of freeway that links the western edge of suburban Detroit and the outskirts of Ann Arbor would be blown off the pavement by the SUVs careening by at 80 miles per hour.

The Bush Administration's decision last week to ask the public to comment on a proposal to update3 the Environmental Protection Agency protocol that produces the fuel-economy figures shown on new car and truck window stickers is just the latest signal to the car business that the nation's "What, me worry?" attitude about gas guzzlers could be shifting.

The overall fuel efficiency of new cars and light trucks purchased in the U.S. has been on a downward slide since 1988, according to the EPA's 2003 report on light vehicle fuel-economy trends. For most of that period, this clearly didn't bother a lot of people. Gasoline was cheap and plentiful compared with the late 1970s and early 1980s. Remember when a gallon of no lead was under a buck? It wasn't that long ago. This period of cheap gas helped ignite the SUV boom, and the rise of light trucks (average fuel economy 17.3 to 18.4 miles per gallon) to more than half of all light vehicle sales, displacing cars that average 23.6 to 24.8 miles per gallon.

Adjusted for inflation, gasoline was cheaper than bottled water in the 1990s. It still is. But in nominal terms, that is, what you and I see on gas station signs, gasoline prices right now are as high as they've ever been. In California, prices are above $2 a gallon. The national average is somewhere around $1.74 for regular no lead.

This spike in gas prices has probably caused a lot of motorists to notice that the official government estimate of their vehicle's city and highway fuel economy isn't what they experience in real life. I am one of those people. My pocket rocket Subaru WRX, with its turbo-charged four cylinder engine, is enjoyable in many ways. But it's no Prius when it comes to gasoline.

Then again, many Prius owners are discovering that the poster car of the Sierra Club set isn't all it's cracked up to be, either. "My window sticker says 52 miles per gallon on the highway," says Russell Long, a spokesman for the environmental activist group Bluewater Network. "I get 40." Mr. Long, who works in San Francisco, allows that he drives "at slightly higher speeds" than the 55 or 60 mile per hour limit.

Mr. Long's organization is the one that two years ago petitioned the EPA to change the way it calculates fuel economy, arguing that the figures the government puts out are essentially propaganda, and confusing at the very least. The government publishes different fuel-economy figures for different purposes. One is used by the Department of Transportation for calculating whether car makers are in compliance with the federal "Corporate Average Fuel Economy" standards. But the EPA has begun publishing a different set of numbers for use by consumers that average about 15% lower than the figures the auto makers get to use when certifying compliance with the fuel-economy rules first established in 1975.

Now, the EPA is going to open up a formal debate on whether it should make the fuel-economy figures presented to consumers even more conservative. The Bluewater Network argues that actual fuel economy can be 20% lower than the EPA figures. (See link to the EPA statement4 on the Bluewater Network petition.)

This move by the Bush Administration apparently caught representatives of the auto industry off guard. But remember, this is the same administration that last year pushed through the first significant increase in the fuel-economy standards5 for sport-utility vehicles, pickups and other light trucks in more than a decade.

The Transportation Department's order for auto makers to increase average light truck fuel economy to 22.2 miles per gallon by 2007 from 20.7 miles per gallon today is a far cry from Democratic Presidential candidate John Kerry's call for a 50% increase in fuel economy by 2015. The auto industry can live with the Bush plan, and is adamant that it cannot live with Mr. Kerry's.

Still, auto makers shouldn't be too shocked that the Bush Administration would decide to at least consider the question of whether the industry is getting it too easy on fuel-economy labels. The EPA stresses that it is not going to tinker with the more generous formulas used to determine whether a company is selling too many gas guzzlers and must pay fines. From a consumer point of view, this is simply a truth-in-labeling issue, not a matter of the government trying to deny people the right to drive a big rig.

Auto-industry officials point out that the fuel-economy numbers printed in big bold type on window price stickers are surrounded by warnings that "actual mileage may vary" depending on a variety of factors. And the EPA supplements the big numbers with figures in smaller type suggesting that real-world fuel economy will probably fall within a range around the big number.

But painful as it would be for most auto makers to see those big numbers revised down because of a more rigorous test, it's worth considering whether more credible numbers would be more beneficial in the long run.

J.D. Power and Associates, the big California market-research firm, every year asks consumers it contacts for its widely followed new vehicle "Initial Quality Study" a question about whether their car experiences "excessive fuel consumption."

Last year, disappointment with gas mileage was the No. 2 complaint among those the Power organization surveyed. In a result that caused a lot of puzzlement (and snickering) in automotive circles, griping about mileage was a leading cause of dissatisfaction among purchasers of the hulking Hummer H2 sport utility, a vehicle so portly that it qualifies as a medium duty truck and thus is exempt from having a fuel economy label at all. What were Hummer buyers expecting? To get 50 miles to the gallon?

But J.D. Power also found that Prius owners also were dismayed, since many of them, like Bluewater's Mr. Long, didn't achieve the super high mileage they expected in return for shelling out a premium to get Toyota's advanced gas-electric drive technology.

Instead of 40 or 50 miles per gallon, "Prius owners reported 30 to 40 miles per gallon," Mr. Walters says.

The way J.D. Power scores these things, underperforming expectations on fuel economy is tantamount to a defect in the vehicle, and knocks down a model's quality scores. No manufacturer likes that. Indeed, Toyota is concerned enough about the Prius situation that a spokeswoman says the company is considering providing Prius buyers with additional information about how to get better fuel economy in their cars, including tips such as avoiding jack rabbit acceleration away from stop lights and other common-sense tips.

Chances are good that auto makers will get dinged again on fuel economy in the Power surveys. The company surveys consumers for its Initial Quality Study during the early part of the year -- in this case just as fuel prices were soaring.

"As the price of gas goes up, we see an increase of excessive fuel consumption problems," Mr. Walters says. "Consumers become more aware of the gas mileage they are getting."

Most marketers would rather under-promise and over-deliver when it comes to product performance. The auto industry is doing it the other way around on fuel economy. Perhaps the bureaucracy at EPA is doing the industry a favor by suggesting, ever so gently, that it's time for a change.

[Klaus]

U.S. Gets Real on Fuel-Economy

Possible Revamp Consumer Data
Is Another Wake-Up Call for Industry

March 29, 2004

Since 1985, the auto industry has made enormous advances in technology, much of it safety gear that adds weight and undercuts fuel economy. During the same period, the way Americans drive has evolved too in ways that don't promote fuel saving. Average commutes and miles driven have risen. Motorists are driving faster on open freeways, but spending more time stuck in congestion shuttling from McMansion to mega-mall in the sprawls surrounding big cities.

Should it be a big shock then that a government test scheme for measuring a new vehicle's likely fuel economy that was last revised 19 years ago appears to generate numbers out of whack with reality?

Consider that the current EPA test includes a 10-mile highway driving segment during which the average speed is 48 miles per hour. I live not far from the Ann Arbor, Mich., lab where much of this work is done. A car doing 48 miles per hour on the stretch of freeway that links the western edge of suburban Detroit and the outskirts of Ann Arbor would be blown off the pavement by the SUVs careening by at 80 miles per hour.

The Bush Administration's decision last week to ask the public to comment on a proposal to update3 the Environmental Protection Agency protocol that produces the fuel-economy figures shown on new car and truck window stickers is just the latest signal to the car business that the nation's "What, me worry?" attitude about gas guzzlers could be shifting.

The overall fuel efficiency of new cars and light trucks purchased in the U.S. has been on a downward slide since 1988, according to the EPA's 2003 report on light vehicle fuel-economy trends. For most of that period, this clearly didn't bother a lot of people. Gasoline was cheap and plentiful compared with the late 1970s and early 1980s. Remember when a gallon of no lead was under a buck? It wasn't that long ago. This period of cheap gas helped ignite the SUV boom, and the rise of light trucks (average fuel economy 17.3 to 18.4 miles per gallon) to more than half of all light vehicle sales, displacing cars that average 23.6 to 24.8 miles per gallon.

Adjusted for inflation, gasoline was cheaper than bottled water in the 1990s. It still is. But in nominal terms, that is, what you and I see on gas station signs, gasoline prices right now are as high as they've ever been. In California, prices are above $2 a gallon. The national average is somewhere around $1.74 for regular no lead.

This spike in gas prices has probably caused a lot of motorists to notice that the official government estimate of their vehicle's city and highway fuel economy isn't what they experience in real life. I am one of those people. My pocket rocket Subaru WRX, with its turbo-charged four cylinder engine, is enjoyable in many ways. But it's no Prius when it comes to gasoline.

Then again, many Prius owners are discovering that the poster car of the Sierra Club set isn't all it's cracked up to be, either. "My window sticker says 52 miles per gallon on the highway," says Russell Long, a spokesman for the environmental activist group Bluewater Network. "I get 40." Mr. Long, who works in San Francisco, allows that he drives "at slightly higher speeds" than the 55 or 60 mile per hour limit.

Mr. Long's organization is the one that two years ago petitioned the EPA to change the way it calculates fuel economy, arguing that the figures the government puts out are essentially propaganda, and confusing at the very least. The government publishes different fuel-economy figures for different purposes. One is used by the Department of Transportation for calculating whether car makers are in compliance with the federal "Corporate Average Fuel Economy" standards. But the EPA has begun publishing a different set of numbers for use by consumers that average about 15% lower than the figures the auto makers get to use when certifying compliance with the fuel-economy rules first established in 1975.

Now, the EPA is going to open up a formal debate on whether it should make the fuel-economy figures presented to consumers even more conservative. The Bluewater Network argues that actual fuel economy can be 20% lower than the EPA figures. (See link to the EPA statement4 on the Bluewater Network petition.)

This move by the Bush Administration apparently caught representatives of the auto industry off guard. But remember, this is the same administration that last year pushed through the first significant increase in the fuel-economy standards5 for sport-utility vehicles, pickups and other light trucks in more than a decade.

The Transportation Department's order for auto makers to increase average light truck fuel economy to 22.2 miles per gallon by 2007 from 20.7 miles per gallon today is a far cry from Democratic Presidential candidate John Kerry's call for a 50% increase in fuel economy by 2015. The auto industry can live with the Bush plan, and is adamant that it cannot live with Mr. Kerry's.

Still, auto makers shouldn't be too shocked that the Bush Administration would decide to at least consider the question of whether the industry is getting it too easy on fuel-economy labels. The EPA stresses that it is not going to tinker with the more generous formulas used to determine whether a company is selling too many gas guzzlers and must pay fines. From a consumer point of view, this is simply a truth-in-labeling issue, not a matter of the government trying to deny people the right to drive a big rig.

Auto-industry officials point out that the fuel-economy numbers printed in big bold type on window price stickers are surrounded by warnings that "actual mileage may vary" depending on a variety of factors. And the EPA supplements the big numbers with figures in smaller type suggesting that real-world fuel economy will probably fall within a range around the big number.

But painful as it would be for most auto makers to see those big numbers revised down because of a more rigorous test, it's worth considering whether more credible numbers would be more beneficial in the long run.

J.D. Power and Associates, the big California market-research firm, every year asks consumers it contacts for its widely followed new vehicle "Initial Quality Study" a question about whether their car experiences "excessive fuel consumption."

Last year, disappointment with gas mileage was the No. 2 complaint among those the Power organization surveyed. In a result that caused a lot of puzzlement (and snickering) in automotive circles, griping about mileage was a leading cause of dissatisfaction among purchasers of the hulking Hummer H2 sport utility, a vehicle so portly that it qualifies as a medium duty truck and thus is exempt from having a fuel economy label at all. What were Hummer buyers expecting? To get 50 miles to the gallon?

But J.D. Power also found that Prius owners also were dismayed, since many of them, like Bluewater's Mr. Long, didn't achieve the super high mileage they expected in return for shelling out a premium to get Toyota's advanced gas-electric drive technology.

Instead of 40 or 50 miles per gallon, "Prius owners reported 30 to 40 miles per gallon," Mr. Walters says.

The way J.D. Power scores these things, underperforming expectations on fuel economy is tantamount to a defect in the vehicle, and knocks down a model's quality scores. No manufacturer likes that. Indeed, Toyota is concerned enough about the Prius situation that a spokeswoman says the company is considering providing Prius buyers with additional information about how to get better fuel economy in their cars, including tips such as avoiding jack rabbit acceleration away from stop lights and other common-sense tips.

Chances are good that auto makers will get dinged again on fuel economy in the Power surveys. The company surveys consumers for its Initial Quality Study during the early part of the year -- in this case just as fuel prices were soaring.

"As the price of gas goes up, we see an increase of excessive fuel consumption problems," Mr. Walters says. "Consumers become more aware of the gas mileage they are getting."

Most marketers would rather under-promise and over-deliver when it comes to product performance. The auto industry is doing it the other way around on fuel economy. Perhaps the bureaucracy at EPA is doing the industry a favor by suggesting, ever so gently, that it's time for a change.

[Klaus]

U.S. Gets Real on Fuel-Economy

Possible Revamp Consumer Data
Is Another Wake-Up Call for Industry

March 29, 2004

Since 1985, the auto industry has made enormous advances in technology, much of it safety gear that adds weight and undercuts fuel economy. During the same period, the way Americans drive has evolved too in ways that don't promote fuel saving. Average commutes and miles driven have risen. Motorists are driving faster on open freeways, but spending more time stuck in congestion shuttling from McMansion to mega-mall in the sprawls surrounding big cities.

Should it be a big shock then that a government test scheme for measuring a new vehicle's likely fuel economy that was last revised 19 years ago appears to generate numbers out of whack with reality?

Consider that the current EPA test includes a 10-mile highway driving segment during which the average speed is 48 miles per hour. I live not far from the Ann Arbor, Mich., lab where much of this work is done. A car doing 48 miles per hour on the stretch of freeway that links the western edge of suburban Detroit and the outskirts of Ann Arbor would be blown off the pavement by the SUVs careening by at 80 miles per hour.

The Bush Administration's decision last week to ask the public to comment on a proposal to update3 the Environmental Protection Agency protocol that produces the fuel-economy figures shown on new car and truck window stickers is just the latest signal to the car business that the nation's "What, me worry?" attitude about gas guzzlers could be shifting.

The overall fuel efficiency of new cars and light trucks purchased in the U.S. has been on a downward slide since 1988, according to the EPA's 2003 report on light vehicle fuel-economy trends. For most of that period, this clearly didn't bother a lot of people. Gasoline was cheap and plentiful compared with the late 1970s and early 1980s. Remember when a gallon of no lead was under a buck? It wasn't that long ago. This period of cheap gas helped ignite the SUV boom, and the rise of light trucks (average fuel economy 17.3 to 18.4 miles per gallon) to more than half of all light vehicle sales, displacing cars that average 23.6 to 24.8 miles per gallon.

Adjusted for inflation, gasoline was cheaper than bottled water in the 1990s. It still is. But in nominal terms, that is, what you and I see on gas station signs, gasoline prices right now are as high as they've ever been. In California, prices are above $2 a gallon. The national average is somewhere around $1.74 for regular no lead.

This spike in gas prices has probably caused a lot of motorists to notice that the official government estimate of their vehicle's city and highway fuel economy isn't what they experience in real life. I am one of those people. My pocket rocket Subaru WRX, with its turbo-charged four cylinder engine, is enjoyable in many ways. But it's no Prius when it comes to gasoline.

Then again, many Prius owners are discovering that the poster car of the Sierra Club set isn't all it's cracked up to be, either. "My window sticker says 52 miles per gallon on the highway," says Russell Long, a spokesman for the environmental activist group Bluewater Network. "I get 40." Mr. Long, who works in San Francisco, allows that he drives "at slightly higher speeds" than the 55 or 60 mile per hour limit.

Mr. Long's organization is the one that two years ago petitioned the EPA to change the way it calculates fuel economy, arguing that the figures the government puts out are essentially propaganda, and confusing at the very least. The government publishes different fuel-economy figures for different purposes. One is used by the Department of Transportation for calculating whether car makers are in compliance with the federal "Corporate Average Fuel Economy" standards. But the EPA has begun publishing a different set of numbers for use by consumers that average about 15% lower than the figures the auto makers get to use when certifying compliance with the fuel-economy rules first established in 1975.

Now, the EPA is going to open up a formal debate on whether it should make the fuel-economy figures presented to consumers even more conservative. The Bluewater Network argues that actual fuel economy can be 20% lower than the EPA figures. (See link to the EPA statement4 on the Bluewater Network petition.)

This move by the Bush Administration apparently caught representatives of the auto industry off guard. But remember, this is the same administration that last year pushed through the first significant increase in the fuel-economy standards5 for sport-utility vehicles, pickups and other light trucks in more than a decade.

The Transportation Department's order for auto makers to increase average light truck fuel economy to 22.2 miles per gallon by 2007 from 20.7 miles per gallon today is a far cry from Democratic Presidential candidate John Kerry's call for a 50% increase in fuel economy by 2015. The auto industry can live with the Bush plan, and is adamant that it cannot live with Mr. Kerry's.

Still, auto makers shouldn't be too shocked that the Bush Administration would decide to at least consider the question of whether the industry is getting it too easy on fuel-economy labels. The EPA stresses that it is not going to tinker with the more generous formulas used to determine whether a company is selling too many gas guzzlers and must pay fines. From a consumer point of view, this is simply a truth-in-labeling issue, not a matter of the government trying to deny people the right to drive a big rig.

Auto-industry officials point out that the fuel-economy numbers printed in big bold type on window price stickers are surrounded by warnings that "actual mileage may vary" depending on a variety of factors. And the EPA supplements the big numbers with figures in smaller type suggesting that real-world fuel economy will probably fall within a range around the big number.

But painful as it would be for most auto makers to see those big numbers revised down because of a more rigorous test, it's worth considering whether more credible numbers would be more beneficial in the long run.

J.D. Power and Associates, the big California market-research firm, every year asks consumers it contacts for its widely followed new vehicle "Initial Quality Study" a question about whether their car experiences "excessive fuel consumption."

Last year, disappointment with gas mileage was the No. 2 complaint among those the Power organization surveyed. In a result that caused a lot of puzzlement (and snickering) in automotive circles, griping about mileage was a leading cause of dissatisfaction among purchasers of the hulking Hummer H2 sport utility, a vehicle so portly that it qualifies as a medium duty truck and thus is exempt from having a fuel economy label at all. What were Hummer buyers expecting? To get 50 miles to the gallon?

But J.D. Power also found that Prius owners also were dismayed, since many of them, like Bluewater's Mr. Long, didn't achieve the super high mileage they expected in return for shelling out a premium to get Toyota's advanced gas-electric drive technology.

Instead of 40 or 50 miles per gallon, "Prius owners reported 30 to 40 miles per gallon," Mr. Walters says.

The way J.D. Power scores these things, underperforming expectations on fuel economy is tantamount to a defect in the vehicle, and knocks down a model's quality scores. No manufacturer likes that. Indeed, Toyota is concerned enough about the Prius situation that a spokeswoman says the company is considering providing Prius buyers with additional information about how to get better fuel economy in their cars, including tips such as avoiding jack rabbit acceleration away from stop lights and other common-sense tips.

Chances are good that auto makers will get dinged again on fuel economy in the Power surveys. The company surveys consumers for its Initial Quality Study during the early part of the year -- in this case just as fuel prices were soaring.

"As the price of gas goes up, we see an increase of excessive fuel consumption problems," Mr. Walters says. "Consumers become more aware of the gas mileage they are getting."

Most marketers would rather under-promise and over-deliver when it comes to product performance. The auto industry is doing it the other way around on fuel economy. Perhaps the bureaucracy at EPA is doing the industry a favor by suggesting, ever so gently, that it's time for a change.