Automakers challenge Mexico's mpg proposal
Photo credit: BLOOMBERG
Mexico's first fuel economy standard, nearly three years in the making, is stalled because of legal challenges from Toyota Motor Corp., Ford Motor Co., Chrysler Group and other automakers.
The proposed standard, Nom-163, would set Mexico's required fleet fuel economy average for new cars and light trucks to 35 mpg by the 2016 model year, nearly identical to the 35.5 mpg standard in the United States. It also would align Mexico's emission standard for new light vehicles with that of Canada, harmonizing regulations in North America.
The automakers say the proposal lacks incentives and credits for new technology such as hybrids and wider use of alternative fuels. Automakers also claim the proposal does not take into account Mexico's altitude, topography and road conditions, which "require design modifications" that have to be "more robust," government documents show.
They also have concerns about the timing and implementation of the standard, requesting more lead time to develop vehicles for the 2014 model year and later.
Environmental groups complain that automakers are fighting a proposed regulation in Mexico that is comparable to those that the companies support in the United States.
But automakers say the proposed standards would raise vehicle prices and reduce sales. In September, Toyota obtained an injunction to stop government work on the standard, and Ford filed a legal challenge. A federal court lifted Toyota's injunction in mid-November, Mexican officials said. But Chrysler was granted a similar injunction in late October.
Aligned with U.S.?
All three automakers said they favor a standard that is aligned with the United States and Canada, but they do not believe the current proposal is. They also say their suggestions have not been considered.
One of Chrysler's main complaints about the proposal is its lack of credits for alternative fuel vehicles, a spokesman said.
The U.S. corporate average fuel economy standard does not offer credits for pure hybrids but includes credits for plug-in hybrids and electric vehicles, which will be multiplied to become greater incentives in the 2017-25 CAFE standards. The Mexico proposal does not include incentives for pure hybrids, plug-in hybrids or EVs.
In Mexico, the local automakers association, AMIA, sought an injunction in addition to legal challenges from other automakers, AMIA President Eduardo Solis said. He declined to identify the other companies.
AMIA and five other automakers -- Toyota, Chrysler, General Motors, Ford and Land Rover -- have submitted comments on the proposal, said Leonora Rojas Bracho, director of urban and regional pollution at Mexico's National Institute of Ecology.
Land Rover took no legal action, a spokesman said.
GM declined to say whether it took legal action, but added "you can be sure that if we decide to take a legal action or we took any legal action in the past against this regulation, it will be to improve the current regulation proposal. ... The current proposal has high risk to increase the CO2 emissions instead of reducing it," Mauricio Kuri Curiel, a spokesman for GM Mexico, wrote in an e-mail. GM also would support a standard that is truly aligned with those of the United States and Canada, he said.
New administration coming
Kate Blumberg, global research program director at the International Council on Clean Transportation, a U.S.-based organization that advises environmental regulators, said that few of the automakers' complaints are valid.
She believes Mexican regulators would consider accepting the same incentives for plug-in hybrids and EVs that the United States has. But the issue is largely irrelevant, she added.
"Realistically there are not going to be many plug-ins or EVs in Mexico in this time frame even if there were huge incentives for them," she said, adding the country still lacks a sufficient charging infrastructure and commercial support.
Blumberg said the companies' most relevant concern is lead time to develop models in time for the 2014 model year and later but that AMIA has been included in the planning for more than two years. She also suggested that the automakers are "trying to run out the clock" as the current administration prepares to leave office.
The standard has been a top priority of Mexico President Felipe Calderon. His six-year term ends Saturday when President-elect Enrique Pena Nieto takes office. But some officials in Calderon's administration worry that Pena Nieto will let the standard fall to the wayside.
Rojas Bracho said that Pena Nieto's likely head of Mexico's version of the EPA is the former president of the Association of Heavy Duty Vehicles.
Reuters contributed to this report