General Motors might have to spend $US678 million to meet new federal fuel economy rules, far more than any other vehicle manufacturer, Reuters reported, citing a United States government analysis.
Go deeper with GlobalData
According to the news agency, the National Highway Traffic Safety Administration (NHTSA) found that GM’s truck fleet would fall well short of higher fuel economy standards in model years 2005 to 2007, while Ford and DaimlerChrysler would meet or be just below the standard.
A GM spokesman on Friday told Reuters that the company was committed to meeting any federal fuel economy requirement, but warned that it would be “extremely challenging.”
“We think it could be difficult to achieve given current and expected demand for large vehicles,” spokesman Mike Morrissey told Reuters.
“Obviously, we’ve not said we’re on a plan to meet this standard as written. We’re certainly considering changing product mix or limiting the availability of popular vehicle features,” Morrissey added, according to Reuters.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
NHTSA on Thursday said it was proposing an increase in fuel economy standards for average fuel economy of light trucks from 20.7 miles per gallon to 22.2mpg in model year 2007, rising to 21 mpg in model year 2005 and to 21.6 in 2006, Reuters said. Early 2005 model year vehicles could go on sale in January 2004, the report added.
Automakers and other groups have two months to comment and suggest changes before NHTSA issues a final ruling, Reuters noted, adding that Morrissey said GM hoped that would be more than a formality.
According to Reuters, several vehicle makers gave NHTSA detailed information about their truck plans for the next decade, along with their expected fuel economy, in part to keep NHTSA from suggesting a standard that was too far out of line with their plans.
According to Reuters, the NHTSA said GM projected its truck fleet would achieve between 18.7 mpg and 20.0 mpg in model year 2005, rising to a range of 19.1 mpg to 20.8 mpg for 2007. The estimates exclude GM’s Hummer brand, whose SUVs are so large they are treated as commercial vehicles and excluded from fuel economy rules, Reuters added.
According to Reuters, Ford said its fleet, including all domestic and foreign brands, would achieve 20.9 mpg in 2005, 21.6 mpg in 2006 and 22 mpg in 2007 while DaimlerChrysler said its fleet would average 21.3 mpg in 2005, rising to 22.3 mpg in 2007. The DC estimates included Chrysler, Dodge, Jeep, Mercedes-Benz and also Mitsubishi, Reuters noted.
Reuters said that DaimlerChrysler and Ford warned that their estimates could be high, but NHTSA said their projections appeared reasonable.
Federal fuel economy averages are based on vehicles sold, so if consumers reject high-mileage models or demand low-mileage ones, a vehicle maker’s average suffers, Reuters said.
Reuters noted that the analysis excludes credits vehicle makers get for vehicles that run on alternative fuels like ethanol, and for achieving fuel economy averages higher than the standards. Such credits have been key for vehicle makers to meet current rules, the report added.
The NHTSA has also analysed how the traditional Big Three were planning to improve fuel economy, the Reuters report said.
It added that the agency found that if GM’s future trucks used technology equal to competitors’ and eliminated engines larger than six litres, it could improve fuel economy by as much as 1.5 mpg in model year 2006.
The $678 million cost would be spread out over three years, Reuters said.
