Though BMW was the first automaker to contact the Bush Administration with concerns about the latest CAFE rules, it didn't take long for more to speak up. As represented by the Alliance of Automobile Manufacturers, the Detroit 3, Toyota, Volkswagen, Mercedes-Benz and others have banded together to proclaim the demands too harsh. Especially considering the current state of automotive affairs, the Alliance alleges that it will be too costly to either meet the goals set out in the latest CAFE standards or face the fines for not meeting them. It is certainly true that most automakers are finding it tough to sell vehicles in these days of turbulent fuel prices and a damaged economy in the U.S.

Eighty-percent of the auto market in the states is represented by the Auto Alliances members, so the issues presented by the groups are sure to be taken seriously. With other groups, including Transportation Secretary Mary Peters, wanting to actually increase the CAFE requirements even further, the auto manufacturers seem to have their work cut out for them.

[Source: Automotive News - sub. req'd]

The deadline for automakers to comment on the latest CAFE standard proposal is today, and at least one manufacturer has decided to speak up. BMW is calling the fuel efficiency standards it would be required to meet 'unattainable.' As you may be aware, the latest proposal takes into account the overall footprint of the vehicle, and manufacturers which sell large vehicles won't be required to meet the same goals as those which produce smaller vehicles. While that's great for manufacturers with truck-heavy lineups, automakers like BMW are in for a world of hurt as they tend to produce smaller, sportier machines. For this reason, BMW would be required to average 37.3 miles per gallon for its cars, quite a bit higher than the 35.7 mpg industry average. The Bavarian's trucks would need to achieve 31.7 mpg, compared to an industry average of 28.6 mpg.

While it may seem a bit unfair (or maybe not) that BMW should be required to hit higher numbers than some other manufacturers, it should be pointed out that BMW currently offers no engines with fewer than six cylinders and is on a bit of a crossover binge as of late. What's more, the marque has proven rather adept at squeezing high power outputs from relatively small displacement, so we'd stop a bit short of suggesting that the numbers being asked of it are unattainable.

[Source: Automotive News - sub. req'd]

The way the draft rules have been defined for the new Corporate Average Fuel Economy standard, Porsche is at a distinct disadvantage. Because the standards for any given vehicle are based on the size of the vehicle, Porsche's relatively small cars have to meet a higher standard than other manufacturers. Apparently Porsche doesn't really care. Detlev von Platen the new CEO of Porsche Cars North America has declared that the German sports car (and SUV) builder will not downsize its vehicles or engines and will not use diesel engines. Porsche doesn't plan to change the high performance nature of its vehicles according to von Platen, although they will increase the fuel efficiency of those vehicles. The Cayenne SUV and the upcoming Panamera four door will both get a new hybrid powertrain that will be shared with Volkswagen and Audi. However, the Cayenne hybrid won't appear until at least late 2010. Porsche has managed to increase the fuel economy of its vehicles to the point that none of the current models are subject to the gas guzzler tax and last year the company average was high enough to avoid a CAFE fine. Going forward that will almost certainly change as Porsche doesn't have any expectation of meeting the 41.3mpg average the new draft rules would impose on the company by 2015.

[Source: Autoweek]

The average cost for Detroit's Big Three automakers to meet the proposed fuel efficiency targets of 31.6 miles per gallon by 2015 has been pegged at $30.6 billion. In contrast, the average cost for the Japanese automakers sits at less than half that amount at "only" $14.85 billion. These numbers come courtesy of a recent study by Global Insight. In a real shocker, General Motors alone is expected to pay out $15 billion alone. Why the disparity? Simple: the Japanese brands already offer more fuel efficient models. With that reasoning, it seems unlikely that the U.S. companies will get much sympathy from the buying public.

Global Insight also predicts that many new technologies which are just beginning to make a dent in sales today will make up a huger percentage of sales by 2015. These new developments include direct injection, turbocharging and diesel engines. Hybrids, the current darling of the fuel efficient crowd, will continue to gain market share, especially as more new models are rolled out which feature the hybrid drivetrain as an option or as standard equipment.

There is a glimmer of hope out there for automakers which are finding it tough to move vehicles in today's troubled climate. Global Insight predicts that there will be a pent-up demand for the replacement of aging models which owners have clung to in the face of high gas prices and a poor U.S. economy sometime around the year 2015.

[Source: Automotive News - sub. req'd]

When Transportation Secretary Mary Peters announced the first draft of new fuel economy standards last month, the increases actually appeared to exceed those mandated by recent energy bill. Of course a closer inspection of the rules indicated that they weren't all they appeared to be. Because the rules mandated fuel economy based on the footprint of an individual vehicle, there existed an incentive for carmakers to stretch the wheelbase and track of vehicles so that they wouldn't have to achieve the same efficiency as a smaller vehicle. However, the reality of the situation at gas pumps around the nation means that corporate average fuel economy standards are quickly becoming irrelevant. Although manufacturers have long wanted higher fuel prices to spur demand for more efficient vehicles, politicians have been loathe to do anything that electoral opponents could hold against them at the polls.

With gasoline now at $4/gallon (an all-time high for the US, but still ranked only 111th in the world) consumers are making up their own minds. NHTSA did its calculations for the new rules with the assumption that gas would be $2.26/gallon in 2015. This, of course, is consistent with the quality of most of the assumptions made by the current administration and totally unrealistic. At least in this case, the result of drivers moving to smaller more efficient vehicles will likely be positive. At any rate, Peters has indicated that the new rules will be re-evaluated and may be toughened. Perhaps they should just forget gas tax holidays and other silliness and just let the market take its course this time.

[Source: Detroit News]

When NHTSA recently released draft regulations to implement the fuel economy requirements from December's Energy Bill a controversial element of the proposal were the footprint-based thresholds. Rather than setting a single requirement that all manufacturers fleets would have to meet, the proposal set mileage thresholds based on the vehicle's footprint (the wheelbase x track width). Each manufacturer would get a requirement based on a sales weighted average of the footprint values for the vehicles it sells. Companies that sell more vehicles with large footprints would have a lower requirement. At the time, I postulated that this might have the effect of encouraging carmakers to stretch the wheelbase and track of their new models in order to lower the required fuel economy.

Now we have a sighting of what is likely a mule for the next generation BMW 1-series. While this vehicle was obviously built before the recent rule announcement, and it does follow the long time trend of making successive generations of a car bigger, it certainly points to the possibilities of the new rules. Of course I'm using this particular photo to illustrate the possibilities of the rules. Instead of encouraging manufacturers to go smaller, the opposite is the case. The upside is that with fuel prices likely to continue rising, consumer demand for more efficient vehicles will likely outpace anything the feds try to do on this subject and the whole discussion will be moot.

[Source: Motor Authority]

When Transportation Secretary Mary Peters announced the first round of new CAFE rules last week, there was nary a peep from the automakers who had complained so vociferously about the the 35mpg standard in the first place. Now there is a clue as to why they have been so quiet. Until now, the fuel economy rules have always been pretty simple. There was a threshold for each model year (currently 27.5mpg for cars) and the sales weighted average for all cars sold by a manufacturer had to beat that level. All companies had the same threshold. If they fell short they paid fines and if they exceeded it they could earn credits towards future years.

Now it's much more complicated. There is a sliding scale based on the footprint of each individual vehicle. The footprint is defined as the wheelbase times the average of the track width or the area within the wheels. The larger the footprint, the lower the threshold that vehicle has to meet. Therefore for two cars of similar overall size but one with a longer wheelbase, the longer one would have a lower mileage requirement. Each automaker is then assigned an individual threshold to meet based on the sales weighted average footprint of the vehicles it sells. A company that sells more large footprint vehicles would have a lower hurdle to jump. One that sells predominantly smaller cars would have to get better mileage. As a result a company like Porsche or Ferrari who sell relatively small sports cars would have to meet a higher standard than Ford or General Motors who sell more large trucks. The entire premise of this rule is absurd. This rule will likely have the effect of giving manufacturers an incentive to maximize the wheelbase and track of new vehicles in order to minimize their CAFE requirement.

The only saving grace here is that, overall, as fuel prices continue to climb, buyers are likely to migrate to more efficient vehicles regardless of the footprint.

[Source: NHTSA, AutoWeek]

U.S. House Speaker Nancy Pelosi (D-CA) has been involved with the ins and outs of the CAFE standards for a long while. This week, following the NHTSA's call for a 31.6 mpg average (35.7 for cars and 28.6 for light trucks) by 2015, Pelosi had some kind word for the President and the NHTSA. So, first the automakers say they're OK with these stricter numbers and now Pelosi lauds Bush? What's going on here? You can try to figure it out for yourself by reading Pelosi's statement in full after the jump, but for a flavor of what she said, check out the opening bit that says, "The Bush Administration should be commended..."

Of course, Pelosi later says that the Administration continues to block progress on climate change legislation by fighting California's efforts to install its own rules. Whew, that's more like it. Thought for a moment there we weren't going to have a bumpy ride to 35 by 2020.

Remember how the automakers fought against the 35 mpg by 2020 CAFE increase late last year? They are also fighting against possible state-by-state emissions and fuel economy regulations issues that are going through the courts. Following the news today of the NHTSA's call for cars to reach a 35.7 mpg average (and light trucks reach a 28.6 mpg average) by 2015, the Alliance of Automobile Manufacturers seems to be OK with it. The Auto Alliance issued a statement today (pasted after the jump) wherein Dave McCurdy, the Alliance's president and CEO says "This proposal represents an important mile marker on the road to at least 35 miles per gallon by 2020." The Alliance - which speaks for BMW Group, Chrysler LLLC, Ford Motor Company, General Motors, Mazda, Mercedes Benz Usa, Mitsubishi Motors, Porsche, Toyota And Volkswagen - said the automakers "believe this tough, nationwide, proposed fuel economy increase will be good for both consumers and energy security. While these increases will present a challenge, it is critical that automakers and consumers have the certainty that this nationwide, 50-state fuel economy rule provides." Looks like the potential patchwork policies were more of a stick in the jaw than higher MPG rules.

We just spoke to GM's Greg Martin, Director, Policy and Washington Communications, about the fuel economy regulations that are being proposed by NHTSA today. Martin reiterated that although the new CAFE rules are tough, it is the company's position that they will meet them just as they said they would back in December when the Energy bill was passed by Congress. At an Earth Day event today in Washington, Transportation Secretary Mary Peters will announce the actual regulations that carmakers will have to meet in response to the mandate from Congress. The Energy bill called for an overall fleet average of 35mpg by 2020. The NHTSA rules will require a fleet average of 35.7mpg for cars and 26.7mpg for trucks, both by 2015.

If this pace continues through 2020, it would exceed the effective 42mpg that would be required by the proposed California CO₂ limits. Since the federal rules would exceed California's requirement, that raises the obvious question of whether that means the automakers would stop fighting the California rules. According to Martin, the issue with the state rules is not so much the mileage requirement. The real problem is the "17 or 18 distinct compliance plans that an automaker would have to manage" due to the patchwork of rules. Not all the states are taking the California rules in whole, some are cherry-picking and paperwork has to filed in each state verifying that the manufacturer is in compliance. This can be particularly problematic if the rules are based on sales within a given state and sales of different types of vehicles vary from state to state. A single national rule simplifies things and allows manufacturers to aggregate sales averages over the whole country.

[Source: General Motors]

Bob Lutz's worst nightmare appears to be on the horizon. Transportation Secretary Mary Peters is expected to unveil proposed regulations for fuel economy today that go beyond what Congress mandated in last December's Energy Bill. NHTSA appears set to require cars to achieve a fleet average of 35.7mpg of 2015 while trucks will have to get to 26.7mpg. That amounts to an average annual increase of 4.6 percent which goes beyond the 4 percent bump required by congress. In order to meet these new requirements carmakers are going to have to dramatically increase the implementation of technologies, like hybrids, biofuels, electrification and most of all reduce power.

In the arcane workings of Washington, Congress defines the requirements for fuel economy in energy bills. Meanwhile the Department of Transportation, through the National Highway Traffic Safety Administration actually defines the specific regulations that automakers have to work to. Why a safety agency is responsible for fuel economy regs remains a mystery. Finally, the Environmental Protection Agency is responsible for enforcement. The proposals will still have to go through a public comment period before they are enacted and we're still waiting for comment from the automakers. Meanwhile it's not clear what if any impact this will have on the battle between the automakers and California over that state's proposals to regulate CO2 emissions which would effectively increase mileage standards. We live in very interesting times.

[Source: Detroit News]

When Nissan introduced the Titan pickup truck earlier this decade, they became the first Japanese Automaker to directly challenge the U.S. manufacturers in the full-size truck segment. Unfortunately for Nissan, the gamble didn't pay off, but the company knows when to stop throwing good money after bad. With sales of only 65,000 a year and no sales outside of North America, it didn't make sense for Nissan to spend money developing a new generation vehicle. The capper on the deal were new fuel economy regulations. Nissan has been trying unsuccessfully for months to line up a supplier of diesel engines for the Titan. The announcement yesterday of the deal between Nissan and Chrysler to swap cars and trucks means the next-generation Nissan pickup will be built off the Ram platform.

It's not known yet if the Nissans will get the hybrid or light duty diesel engines that will debut in the Ram in 2010. Chrysler spokesman Nick Cappa told ABG that GM, Daimler and BMW would have to agree before Nissan could be included in the hybrid program. Since Daimler and BMW don't compete in the segment, and GM and Chrysler could certainly use the extra volume to bring costs down, it seems likely that the Nissan truck will eventually be found with a hybrid system. For the new light duty Cummins diesel, Dodge will probably get a period of exclusivity, but it seems likely that Nissan wouldn't even bother with a truck if they couldn't get a diesel, since everyone else in the segment will have one by 2010.

[Source: Automotive News - Sub. req'd]

We all know that the Democratic Representative from the Automakers Michigan, John Dingell, is a foe of state-based regulations over the auto industry. Back in February, he tried to revive an excised portion of the energy bill that would have made federal CO₂ limits take precedence over state rules. In an editorial in Automotive News (subs req'd), Edward Lapham writes that it's Dingell who will be of very few lawmakers who "get" why America needs a national fuel economy law instead of allowing states to set their own rules. The three major presidential candidates, Lapham writes, don't get it and neither do many other in Congress. Lapham even equates states setting their own fuel economy rules "would be akin to letting them print their own money." For Lapham and Dingell, the protracted wait between federal increases in the CAFE standard must have looked pretty good. If all the power sits in Washington, then you can slow laws down there and be all set. I mean, if the feds retain control, then Dave McCurdy might be able to stay home more.

[Source: Edward Lapham / Automotive News (subs req'd)]

The theme of this year's Society of Automotive Engineers World Congress is "A Climate for Change" and the host company is Chrysler. Chrysler's VP of Regulatory Affairs, Deb Morrissett, spoke today at an SAE luncheon in Detroit in advance of the Congress next month. Morrissett spoke about the new fuel economy regulations and what it would take for Chrysler and other companies to meet the standards. She talked about how efficiency has actually been improving at the rate of 1-1.5 percent annually for the past two decades. However the improvements have been consumed by increasingly large and powerful vehicles with more features.

The new energy bill will require real increases of 3.5 percent a year for the next dozen years. To meet that standard, Chrysler and other manufacturers will have to use every available option including more efficient internal combustion engines, increased electrification, diesels, biofuels and new transmissions. While Chrysler may realize what they need to do, actually accomplishing it will be particularly difficult for them given their precarious finances. They also have a more fundamental problem of a vehicle lineup that contains few vehicles people actually seem to want to buy. The full transcript of the speech is after the jump. ABG will be at the SAE Congress the week of April 14 in Detroit.

35 mpg by 2020. Sounds simple, right? Well, it sounds simple unless you're an auto industry engineer who needs to help build a bunch of cars that achieve that number. But to the rest of us, those are some pretty easy-to-remember numbers. Still, how do we get from where we are today (a corporate average fleet economy of 27.5 mpg for cars) and that magical 35-by-2020 number? This is a problem that the National Highway Traffic Safety Administration (NHTSA) and the White House need to resolve, for now anyway.

Last week, NHTSA sent a proposal for how annual fuel economy increases might work to the White House. According to the Detroit News, NHTSA has specified four years of increases, but the White House Office of Management and Budget now gets to review and possibly revise the proposal. NHTSA said it would like the internal discussions completed by April, at which time the public would get a chance to comment. A final decision will likely come by the end of 2008.

[Source: David Shepardson / Detroit News]