U.S. releases final rule for increasing vehicle fuel efficiency

U.S. releases final rule for increasing vehicle fuel efficiency
Bloomberg News April 1, 2010 - 12:32 pm ET
UPDATED: 4/1/10 1:25 p.m. ET

WASHINGTON (Bloomberg News) -- The Obama administration released a
final rule today requiring automakers to boost fuel economy to an
average 35.5 miles per gallon for 2016 model vehicles.

President Barack Obama, automakers, union leaders, state officials and
environmentalists agreed on the goal in May. The administration
released a preliminary version in September.

"This is a significant step towards cleaner air and energy
efficiency," Environmental Protection Agency Administrator Lisa
Jackson said in a statement. "Our economic and environmental
priorities go hand-in-hand."

The rule will cost auto manufacturers $52 billion to comply for the
2012 through 2016 model years, according to the agencies' rule.
Carmakers will recover most or all of the costs through higher prices
for their vehicles, according to the rule.

The EPA's 2016 target of 35.5 mpg would be reached if all emission
reduction standards came from fuel-economy improvements, including
credits automakers may receive toward the goal by making
air-conditioning improvements.

The National Highway Traffic Safety Administration, which issued joint
fuel-economy rules with the EPA, estimates an average fleet-wide fuel
economy of 34.1 mpg.

Fuel savings

Passenger cars will have to meet a target of 37.8 mpg by the 2016
model year, while pickups, sport utility vehicles and minivans will
need to average 28.8 mpg, according to an Obama administration fact
sheet.

The rule will raise vehicle costs an estimated $926 by 2016 models,
according to the fact sheet. Over the life of the vehicle, consumers
may save more than $3,000 in reduced fuel costs, the agencies
estimated.

The new targets are up from the 27.3 average required for 2011 models
covered by the previous rule. The 5 percent annual increase in fuel
mileage in the next five years would save 1.8 billion barrels of oil
and reduce 960 million metric tons of greenhouse gas emissions by
2016, the administration said.

Reactions vary

Groups representing the automobile industry and car dealers had
strikingly different reactions to the new rules.

"The regulations provide manufacturers with a roadmap for meeting
significant mileage increases for model years 2012-2016, as well as
the certainty and lead time necessary to cost effectively add new
technology," the Alliance of Automobile Manufacturers, which consists
of 11 domestic and foreign automakers, said in a statement.

The group's CEO, Dave McCurdy, added that the new regulations "mark
the beginning of a new integrated approach" that "eliminates the
patchwork of regulations and conflicting standards across the
country."

But the National Automobile Dealers Association said that the new
rules will create more regulatory confusion, not less.

It said that there would be three different fuel-economy standards set
by the U.S. Transportation Department, the U.S. Environmental
Protection Agency and the California Air Resources Board.

Automakers' costs in complying with these different rules will rise,
and they will pass on these costs to consumers in the form of higher
prices -- making it more difficult for dealers to sell cars, NADA
said.

"Under these new mandates, the price of new cars and light trucks will
rise significantly, meaning fewer Americans will be able to buy the
new vehicles of their choice," said NADA chairman Ed Tonkin.

Neil Roland contributed to this report.


Read mo
http://www.autonews.com/apps/pbcs.dl...#ixzz0js87fMhI