U.S. extends concession on trucks to win support for higher mpg targets
Photo credit: BLOOMBERG
In a concession that helps Detroit's Big 3, the Obama administration is willing to allow automakers to improve the fuel economy of future trucks and SUVS at a slower pace than cars, The Wall Street Journal reported, citing people familiar with the discussions.
Government regulators hope to reach a deal by early next week on new rules that would nearly double mileage requirements to 56 miles a gallon by 2025, the paper said.
The proposed standards would apply to both cars and light trucks
But automakers would be able to take longer to meet the target with larger light trucks and pickups such as the Ford F Series and Chevrolet Tahoe.
The concession by the White House is aimed at easing widespread opposition to tougher mileage targets by automakers, including General Motors and Chrysler, which received government bailouts.
The White House has already backed off a plan floated last spring that would have set a fuel economy target of 60 mpg or higher.
The administration now wants to hike the Corporate Average Fuel Economy, or CAFE, standards from the current target of 35.5 mpg by 2016 to 56 mpg by 2025.
Smaller trucks, SUVs and crossovers, a segment dominated by Toyota Motor Corp. and Honda Motor Co., initially would be required to meet higher fuel economy goals, the paper said.
The Journal said the administration this week offered several proposals to break the stalemate, citing people close to the talks. One plan would let the fuel economy of light trucks advance at a rate of 3.5 percent a year, well below the 5 percent annual improvement that would be set for cars.
It's unclear if the proposals will be included in any final deal, the Journal said.
The administration hopes to propose formal rules in September.
White House spokesman Clark Stevens told the Journal the talks with automakers and others have been constructive.
The final rules could affect the competitive balance in the U.S. market.
Despite new entries from Toyota and Honda, Detroit's three automakers have long dominated the market for large trucks, which generate hefty profits.
The F Series, Chevrolet Silverado, and Ram truck are among the most popular vehicles sold.
Asian automakers tend to outperform Detroit automakers when it comes to small trucks, such as the Toyota Tacoma, and the Toyota RAV-4 and Honda CRV -- both small SUVs.
In meetings with U.S. regulators, Japanese and Korean carmakers argued the proposed rules would give Detroit companies an unfair advantage.
They argue that the leeway would encourage consumers to buy the least fuel efficient models, defeating the government's goal.
You can reach David Phillips at email@example.com.