Big SUVs May Face
Tougher Fuel Standards
In Overhaul of Mileage Rules,
Regulators Consider Lifting
Exemption for Large Vehicles
By LAURA MECKLER
March 22, 2006; WSJ Page D1
The Bush administration is considering subjecting the biggest vans and sport-utility vehicles to fuel-economy standards for the first time. The move would please environmentalists but put new pressure on struggling domestic auto makers, particularly General Motors Corp.
The biggest SUVs, vans and pickup trucks -- those weighing between 8,500 and 10,000 pounds -- have been exempt from fuel-economy rules since they were established in the 1970s, a time when regulators didn't foresee such large vehicles being used as the family car. In 2003, the administration announced plans to overhaul the fuel standards for all so-called light trucks (which include SUVs, minivans and pickups) and said it might also impose mileage targets for the big SUVs and passenger vans. But when the proposed rule was published last August, the heavy vehicles remained exempt. (Light trucks now represent more than half of all vehicles sold.)
Now the administration is considering including them beginning in 2011, according to people in the auto industry and with environmental groups who are closely watching the administration's course. The new proposal would still, however, affect only a small slice of heavy vehicles: The administration plans to continue to exempt pickup trucks, which constitute the vast majority of vehicles over 8,500 pounds.
A new rule would hit GM the hardest. Four SUVs sold last year have versions that weigh more than 8,500 pounds and would be affected by a new rule. One, Ford Motor Co.'s Excursion, is no longer in production. The other three -- Hummer H2, Chevy Suburban and GMC Yukon XL -- are GM products.
The move could force GM to limit sales of its largest vehicles to avoid penalties, meaning fewer would be available to shoppers. The company could also employ new technology to improve the mileage of its biggest guzzlers, which might increase the sticker price but would ultimately help consumers save at the pump.
The administration estimated that requiring these vehicles to improve their mileage would save a half billion gallons of fuel in 2011 and would cost manufacturers between $900 and $2,800 per vehicle. (To increase mileage on a vehicle, manufacturers have a variety of options, all of which cost money, including using lighter materials and adding advanced-technology systems that allow the car to run on less fuel.) Auto makers have lobbied against the change. GM had no comment, but Charles Territo, spokesman for the Alliance of Auto Manufacturers, a trade group, said: "Auto makers are working to integrate fuel savings into all vehicle classes including larger trucks."
The regulation is currently under review by the White House Office of Management and Budget and is expected to be issued as soon as next week. The National Highway Transportation Safety Administration, which oversees the fuel-economy program, must issue a final rule by April 1, in time to affect the 2008 model year. A NHTSA spokesman had no comment.
People familiar with the discussions cautioned that no decisions have yet been made, and the final regulation may continue to exempt large vehicles. Some questioned whether the administration would hit GM at a time when the company is facing significant financial troubles. But environmentalists were encouraged. "We welcome the administration's attention to the largest SUVs and vans, which consume more fuel that almost any passenger vehicles on the road," said Eric Haxthausen of the Environmental Defense Fund.
Even without a new rule on heavy vehicles, the proposed regulation represents the biggest change to the so-called Corporate Average Fuel Economy standards for light trucks since the rules were first written three decades ago. It modestly raises mileage targets for manufacturers of SUVs, vans and pickups, but also helps auto makers by changing the way the government measures compliance. Specifically, it would allow GM and Ford to sell large numbers of their profitable big trucks without having to balance them with sales of slower-selling trucks that get better mileage.
Under the current system, performance is measured by averaging gas mileage of an auto maker's entire fleet of light trucks, a problem for GM and Ford, which sell a disproportionate number of big vehicles with low mileage. Under the new system, mileage targets would be based on the size of the vehicle, with six size categories, each with its own mileage standard. Compliance would be judged based on a weighted average.
Current regulations require manufacturers to meet a fleetwide average of 22.2 miles per gallon by 2007. Under the new system, the smallest trucks would need to average 28.4 mpg by 2011; the largest would need to reach 21.3 mpg. Depending on the vehicle mix, the government projected that the fleetwide average would have to be about 24 mpg in 2011.
In its final version of the regulation, the administration is expected to increase those targets modestly. That's because the government believes that gas prices will rise higher than previously expected. The fuel-economy targets are based partly on the price of gas, and the more gas costs, the more important it is to require that vehicles be fuel efficient.
|
03-22-2006, 11:22 AM
Posting Rules
Linear Mode
