Big Three Try to Rev Up Weakened Political Clout
Congress Is Asked
To Ease Its Plans
On Fuel Standards
By MIKE SPECTOR AND MAYA JACKSON-RANDALL
June 7, 2007; Page A4

WASHINGTON -- Detroit's Big Three auto makers are making a concerted push to slow the momentum to raise fuel-economy standards, in a test of the industry's weakened but still considerable political clout.

The chief executives of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group met with lawmakers in Washington yesterday amid an escalating energy debate that is playing a central role in the 2008 presidential election. The companies are weighing in as they struggle under the weight of deep losses in North American operations and falling market share.

As early as next week, the Senate will debate a bill requiring auto makers to build cars and trucks that achieve a fleet-wide average of 35 miles per gallon by 2020, a considerable jump from the current corporate average fuel economy standard, known as CAFE, of about 25 mpg. After that, the bill mandates 4% annual mileage increases for several years after.

Detroit's auto makers and Toyota Motor Corp. of Japan have said such a drastic increase will be costly and could force companies to build cars Americans aren't willing to buy. One Bush administration estimate put the cost of 4% annual increases in mileage standards between 2010 and 2017 at $85 billion for the Big Three.

The bill's overall goal has broad support but could be in for contentious debate as some senators push for tougher regulations. Others, notably Michigan Democrats Carl Levin and Debbie Stabenow, plan to introduce an amendment significantly easing the burden for their auto constituents.

In private meetings yesterday with lawmakers in Washington, GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Tom LaSorda told congressional leaders that a 35 mpg fleet-wide target isn't cost-effective or technologically achievable, according to people familiar with the matter. Instead, the industry lobbied for lower targets and asked for government investment in biofuels and advanced batteries for plug-in hybrids, these people said.

Stopping the momentum could be difficult. Sen. Byron Dorgan (D., N.D.) criticized the auto industry for running ads in newspapers saying that Congress is looking to force consumers to drive smaller cars. He said instead of running those ads, Detroit should be working with Congress on raising fuel efficiency standards.

"I just want you to know I think the issue is over. I think you lost that issue," Mr. Dorgan said at a manufacturing summit yesterday attended by lawmakers and auto executives. "I believe you're going to be confronted with a Congress that says [tougher] CAFE standards are on the way."

Detroit's political clout has weakened as the Big Three have ceded market share to rivals Toyota and Honda Motor Co., which enjoy a reputation for being more fuel-efficient. (See related article.) They have also gained support in Washington by setting up manufacturing facilities in the U.S. Today, many lawmakers view domestic auto makers as builders of gas-guzzlers, despite Detroit's recent foray into hybrids and other more efficient vehicles.

Mr. Wagoner said auto makers have raised fuel-economy as required under the 30-year CAFE program. "Thirty years later, we've done our part." U.S. dependence on foreign oil has grown nevertheless, he told senators, including presidential candidates Hillary Clinton and Joe Biden. Mr. Biden has been a proponent of tougher mileage standards. In the Senate, Sen. Clinton has supported increasing fuel efficiency by 10 mpg over the next decade, according to a spokesman.

Still, Mr. Wagoner acknowledged the momentum toward tougher mileage standards, saying "my sense is there will be increases in CAFE, but we hope they will be responsible levels." The auto maker hasn't outlined its specific desire for such legislation, but allies in the Senate are scrambling to push softer legislation, while also pushing Detroit's call for government subsidies to develop further-out technologies, such as batteries and hydrogen fuel cells.

In prepared remarks delivered to senators, Mr. Wagoner pointed to a Japan trade ministry announcement last week that it will spend 209 billion yen -- just over $1.7 billion -- to help develop that country's next generation cars and fuels to cut emissions of carbon dioxide, the main gas blamed for global warming. "We would greatly appreciate Congress and the administration leading this effort, just as is happening in other countries," Mr. Wagoner said.

Other proposals include a potential amendment by Mr. Levin and newly drafted legislation in the House. Mr. Levin's plan would allow auto makers to avoid fuel economy regulations altogether if they demonstrate they intend to build vehicles that would get far better mileage than required by CAFE, such as gasoline-electric hybrids and flex-fuel vehicles capable of running on E85, a blend of 85% ethanol and 15% gasoline.

"We've got to do a heck of a lot better in supporting our manufacturers," Mr. Levin said. Any fuel economy increase has got to be "responsible" and "achievable," he said.

The proposal, co-written by Ms. Stabenow and other lawmakers, would also maintain the current regulatory distinction between passenger cars and light trucks, allowing light trucks to meet a lower standard. Passenger cars would have to achieve an average 36 mpg by 2022 while trucks would have to achieve a 30 mpg average by 2025.