If Congress funds a $25 billion loan program to finance production of more fuel-efficient vehicles, General Motors and Ford Motor Co. are poised to take quick advantage.

By contrast, Chrysler LLC trails far behind. And import automakers such as Toyota and Nissan will find it difficult to meet eligibility standards that favor the Detroit 3 and their suppliers.

If Congress were to fund the loans today, they would have an interest rate of 5 percent — a very good deal for the automakers.

The loans could be used to retool assembly plants, engineer vehicles or help suppliers that produce key components.

Last week, none of the Detroit 3 was willing to indicate how it would spend the money. But GM CEO Rick Wagoner appealed to a Senate panel to loosen legal limits on use of the loans. Wagoner told a Senate hearing last week that he was speaking for the Detroit 3 and the UAW.

Wish list

If the Detroit 3 aim for a payoff within the next five years or so, it's possible to identify a likely wish list of projects. Here are some possible candidates, starting with GM:

n Make the Two Mode hybrid powertrain — available in full-sized pickups and SUVs — widely available in front-wheel-drive cars and crossovers such as the Chevrolet Impala, Pontiac G6 and Buick Enclave. Although this appears technically feasible, GM currently has no plans to do so. The process would take about two years.

n Expand the use of diesel engines. In 2010, GM will introduce a 4.5-liter diesel V-8 for pickups and SUVs. GM could make a V-6 version for rear-wheel-drive cars such as the Cadillac CTS.

n Speed development of GM's homogeneous charge compression ignition engine. It combines the best traits of gasoline and diesel engines for a 15 percent fuel economy gain. GM hopes to introduce it in 2015.

To qualify for loans, vehicles must get at least 25 percent better fuel economy than the segment average. But Wagoner testified last week that vehicles with 10, 15 or 20 percent better fuel economy also should qualify.

n Launch production of the Chevy Volt in 2010. The plug-in hybrid appears ideally suited for the loan program, which could help pay for engineering and factory retooling.

Batteries, turbos

Here's what Ford Motor Co. could do with federal loans:

n Upgrade the Ford Escape and Mercury Mariner with plug-in hybrid powertrains featuring lithium ion batteries. Ford says they can travel 30 miles on electricity alone and would average up to 80 mpg. If Ford approves the plug-ins this year, it could roll them out in late 2010.

n Revive proposals to install diesels in small U.S. cars. The 1.4- and 1.6-liter diesel engines used in the European Fiesta and Mondeo would yield a 30 percent fuel economy gain. It would take about two years to launch diesel engine production in the United States.

n Speed development of the small, fuel-efficient Ecoboost family of turbocharged engines. The first Ecoboost engine will debut next spring in the Lincoln MKS.

n Introduce a fuel cell version of the Ford Edge crossover. The vehicle could see limited production in 2012.

Weak link

Last year's split from Daimler left Chrysler LLC as Detroit's weakest link. But in a speech last week, Chrysler co-President Jim Press said his company would make good use of the federal loans.

"To us, it's a way to accelerate the development of technology and put it into the hands of the customer who can afford it," Press told the Automotive Press Association in Detroit.

In the short term, Chrysler has two viable options — hybrid powertrains and diesels. Chrysler could:

n Install its Two Mode hybrid — which it designed jointly with General Motors — in big rwd cars such as the Chrysler 300 and Dodge Charger. Chrysler also could adapt that hybrid powertrain for use in front-wheel-drive cars and minivans.

n Roll out two new diesel truck engines — a 4.2-liter V-6 and a 5.2-liter V-8 — in 2010. The V-6 also could be tuned for rwd cars such as the 300 sedan. The engines, built by Cummins, would be 30 percent more efficient than comparable gasoline engines.

n Develop an electric car or perhaps a plug-in hybrid. Last week, Press revealed plans to unveil a concept electric vehicle at the Detroit auto show in January. Chrysler displayed three electric concept cars at this year's Detroit show. c

Harry Stoffer contributed to this report

You can reach Richard Truett at rtruett@crain.com
Tags: Automakers

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