US consumer advocate says automakers' fuel economy declining

US consumer advocate says automakers' fuel economy declining

Washington (Platts)--13Nov2006

Nine of 13 automakers surveyed by the Consumer Federation of America have
worse fuel economy averages now than they did 10 years ago, it said in a
report issued Monday.

The report, which was issued a day before President Bush is set to meet
with CEOs of the "Big-Three" US automakers, indicated that US consumers want
the same types of automobiles as they have always bought.

"The market is essentially replacing more fuel efficient vehicles with
less fuel efficient vehicles," said Jack Gillis, an author of the report and
CFA's director of public affairs. CFA is lobbying Congress to pass laws that
increase the fuel economy of the US automotive fleet.

The group said that people want lower mileage cars, but they don't want
to change the kinds of cars they drive. The report's authors said buyers were
concerned about the national security implications of dependence on foreign
oil, but the gasoline price drop since August when a gallon cost over $3.00
had contributed to less demand for more-feul efficient cars.

White House spokesman Tony Snow said Friday that Bush Tuesday would
"reaffirm his support for the American auto industry" and he wanted to "thank
them for some innovative activities such as creating flex-fuel vehicles and
hybrids that enable us to find new ways to power our large and always growing
automotive fleet in this country in such a way as that it gives us a little
better ability to try to wean ourselves from an addiction to oil."

But CFA officials said US automakers' strategy of increasing the number
of flex-fuel vehicles is ineffective because there are only 1,000 fueling
stations that sell the 85% ethanol to 15% gasoline blend that flex-fuel
vehicles run on out of 180,000 service stations nationwide.

They also criticized US automakers for not competing in the hybrid market
and said they didn't expect much from the meeting with the president.

Mark Cooper, CFA's research director, said that automakers direct the
market toward less efficient cars using advertising and incentives and he said
policymakers "need to orient people" toward more efficient cars.

"Industry is heading in the opposite direction," Cooper said. He said
several bills being endorsed by bipartisan members in both chambers of
Congress would involve some regulation, some education and some taxation to
trigger oil savings.

The report concluded that only DaimlerChrysler, Ford and Toyota had
better fleet wide fuel economy in 2005 than in 1996, and Subaru's was
unchanged.

Cooper said that Honda (29.3 miles per gallon in 2005), Toyota (28.9
mpg), and Hyundai (28.2 mpg), which had the highest average fuel economy, were
doing well in the market, while American carmakers General Motors (24.6 mpg),
Ford (24.1 mpg) and Daimler Chrysler (22.9 mpg) were struggling in the market
and are three of the four worst performers in terms of fuel economy.

Current gas prices are over $2/gallon in most of the US.

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