Suppliers are being increasingly called upon to help vehicle manufacturers meet new European and US fuel economy and CO2 emissions targets.

According to automotive component industry analysts SupplierBusiness, vehicle manufacturers will need to pursue all alternative fuel technologies available, including bio-fuels, to meet the targets, and they are looking to suppliers to conduct the necessary research and development work.

Speaking at the recent SAE convention, Donald Walker, co-CEO of Magna International, claimed that suppliers share of total R&D or vehicle development will jump from 40% today to 60% by 2012.

"Expanding development responsibilities come as automakers look for suppliers to provide entire systems, be it a complete interior or drive train, rather than just individual components. The more systems a supplier takes on, the greater its responsibility to make them as energy efficient as possible," SupplierBusiness said.

The knock-on effect of this is that only suppliers offering advanced technology will prosper, whilst others will fall by the wayside.

"There will be fewer pieces of the business to bid on, so the supply chain is going to shrink" Walker said. "Some suppliers will prosper and others will go out of business."

A survey at the SAE suggests that that environmental issues, such as CAFE standards and fuel economies, are now the biggest issue to the auto industry; bigger even than costs.

As deadlines to chase down emissions targets close in, the intensifying debate over bio-fuels' economic and environmental impact is seen by some as an annoying roadblock, and has provoked, in certain quarters, outspoken irritation.

With large "flex-fuel" vehicle programmes and investments in bio-fuel producers in place, the stakes are high for an industry under pressure to meet rising European and US environmental standards that could have a multi-billion-dollar impact on business.

Rick Wagoner, General Motors' chairman and chief executive, last week dismissed United Nations research linking higher food prices to ethanol production as "shockingly misinformed" claiming that "oil prices are a far bigger driver of higher food prices than ethanol."

However, Wagoner also voiced support for cellulosic ethanol, which is made from plant waste rather than food crops. GM announced a partnership last month with Coskata, a company that makes ethanol from sources including garbage and tyres.

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