Auto industry gets more schizophrenic every day

It’s hard to make sense out of the news this week from our auto industry pals. On the one hand the whiney heads of Detroit's leading car-makers asked Congress yesterday to reconsider a proposal to increase fuel standards that the automakers say could hurt their industry. GM, Ford, and Chrysler all lined up to say they prefer the status quo when it comes to doing anything about fuel economy or other environmental issues. The current administration has put forth the idea that after 2010 it will mandate carmakers increase fuel economy by 4% annually through 2017. That notion has sent shudders down the backs of the not-so-Big Three CEOs. A 4% increase in gas mileage standards would be "extraordinarily expensive and technologically challenging to implement," said Rick Wagoner, General Motors' chairman and chief executive in  testimony before a Congressional hearing in March – position he reiterated yesterday. In an Associated Press report on the testimony Senator Byron Dorgan, Democrat of North Dakota, noted the industry had resisted past increases and was now running advertising saying a Senate proposal would "take your pickup truck away.""I think the issue is over -- I think you've lost that issue. I think your position is yesterday forever," Dorgan told the executives. "I think the Congress is moving on, and you're going to have increased efficiency requirements."We’ll see.  Meanwhile Honda this week said it would discontinue the hybrid version of its Accord sedan, citing disappointing sales. With gas prices spiking, one wonders how that is possible. Published reports said that despite the Accord’s superior performance compared with some of its higher-volume competitors, the Accord hybrid was a tough sell.  For example, The hybrid Accord gets about 28 miles to the gallon in the city and starts at about $31,090, while the hybrid version of the company’s smaller Civic sedan gets about 49 MPG and starts around $22,600, according to Honda’s Web site.By comparison, Toyota’s Prius gets an estimated 60 miles per gallon and carries a $22,175 price tag, and the Toyota Camry hybrid gets about 40 MPG and costs $26,000.And in the face of Honda’s news and the Big Three griping about fuel standards, Toyota today said global sales of its hybrid vehicles have hit 1 million. Toyota’s cumulative sales of gas-and-electric-powered vehicles totaled 1.047 million as of the end of May. Of those, nearly 345,000 hybrids were sold in Japan, while 702,000 were sold abroad, the company said in a statement Thursday. Sales of Toyota hybrids have climbed from just 18,000 in 1998 to 312,500 last year, the company said.Flying in the face of all of this news this week is a study from consulting firm CSM Worldwide that shows that American consumers still aren’t sold on small, fuel efficient cars.  The study showed American buyers are likely to avoid cars that are smaller than the subcompact vehicles already on the U.S. market such as the Honda Fit, Chevy Aveo and Toyota Yaris.  American consumers are likely to forfeit a few miles per gallon rather than buy a car less than 150 inches in length, about the size of the Mini Cooper, which is the shortest car currently sold in the United States, CSM said.  Fewer than 100,000 minicars will be sold annually through 2013, according to CSM, while annual sales of subcompacts like the Fit and Yaris are expected to rise from an estimated 300,000 in 2007 to over 550,000 by 2013.That news is backed up by the fact that sales of pickup trucks, vans and SUVs - which generally offer the worst fuel economy, rose almost 4% in May despite gas prices that have gone over $3.30 per gallon in many areas of the US. Naturally there is a flip side to this story too.  Newly released sales figures from researchers at R.L. Polk shows a record number of alternative fuel automobiles were indeed sold in the first quarter of 2007. In the first three months of the year, more than 434,000 were bought -- an increase of 27 percent over the same period last year.Sixty models of Alternative Fuel Automobiles are on sale today and more are in development, including hybrid-electric, clean diesel, ethanol capable and others, R.L. Polk says.What does all this add up to? Confusion and in-action mostly. 


Copyright © 2007 IDG Communications, Inc.

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