U.S. mileage standards for cars up for first time

John Crawley, Reuters 27 Mar 09;

WASHINGTON (Reuters) - The U.S. government on Friday imposed the first increase in mileage standards for passenger cars and boosted the floor for sport utilities and pickups beginning with model year 2011 vehicles.

The modest increase of less than 1 mile per gallon for the fleet over current targets for the fleet represents an abbreviated approach by the Obama administration as it confronts industry distress and pressure from California and other states to set their own goals.

"These standards are important steps in the nation's quest to achieve energy independence," said Transportation Secretary Ray LaHood, who added that work on future mileage programs must take into account the health of U.S. manufacturers.

General Motors Corp and Chrysler LLC are seeking new government bailouts to survive. Ford Motor Co is restructuring without government help.

The Detroit Three profited for years from larger and less efficient vehicles but now face the double wallop of a market downturn fueled by recession and a consumer shift away from their bread-and-butter products.

The standard, which is expected to cost industry $1.4 billion in vehicle design and other changes, would require compacts, sedans and other passenger cars to average 30.2 miles per gallon in combined city/highway driving, up from the 27.5 mpg standard that was established in the late 1970s under the Corporate Average Fuel Economy (CAFE) program.

Domestic and some major overseas manufacturers, through their top lobbyist, Dave McCurdy, called the regulation "an important first step." McCurdy urged the administration to bridge competing federal and state concerns on fuel efficiency and develop a cohesive national standard for 2012-15.

Many passenger cars made by overseas manufacturers already meet or exceed the standard.

Toyota Motor Corp expects its 2010 Prius hybrid to get 46 mpg while estimates for the Insight hybrid made by Honda Motor Co is 41 mpg.

Detroit's efforts to revamp its fleet include the Ford Fusion hybrid sedan, due in showrooms this spring, that gets 41 mpg/city.

Light trucks, which include pickups and SUVs, would have to average 24.1 mpg in 2011, compared with 23.5 mpg the previous year. Overall fleet performance would be 27.3 mpg, a 2 mpg increase over 2010, according to the 857-page regulation.

The new standards would save nearly 900 million gallons of fuel and reduce carbon dioxide emissions by 8.3 million metric tons over the lifetime of model year 2011 vehicles, the Transportation Department said.

The administration calculates more than $2 billion in overall benefits to consumers from the program, including less money spent on fuel.

Congress has required that the U.S. fleet of cars and light trucks average 35 mpg by 2020, a 40 percent increase over today's performance.

The Bush administration sought to establish annual goals between 2011-2015, but the Obama administration cut that back to one-year, 2011, while it assesses the future of GM, Ford and Chrysler, factors in potential volatility of fuel costs, and weighs the attempt by California and a dozen other states to move in a different direction.

Current federal efficiency targets are based on vehicle size and calculated by the DOT's National Highway Traffic Safety Administration (NHTSA), an approach favored by carmakers.

California has adopted and is seeking federal permission to enforce a separate standard based on emissions.

(Reporting by John Crawley. editing by Gerald E. McCormick and Steve Orlofsky)