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Changes in mileage standards

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Link: http://www.detnews.com/2005/autosinsider/0...auto-304510.htm

Changes in mileage standards: What will consumers really see from carmakers?

Analysts predict successes mixed with setbacks

By Kathleen Pender / Scripps Howard News Service / San Francisco Chronicle

What changes, if any, will consumers see as a result of the new fuel- economy standards proposed for light trucks, which include pickups, sport utility vehicles, vans and minivans?

"I can see a number of possible effects, all minor, some good, some bad," says Therese Langer, transportation program director with the American Council for an Energy-Efficient Economy.

The possibly positive outcomes include wider adoption of existing technologies that incrementally increase fuel economy, such as cylinder deactivation and continuously variable transmissions.

The law could backfire, however, if automakers make vehicles slightly bigger so they can fit into a larger class, where fuel requirements will be lower, or if the price of smaller trucks goes up because the automakers don't have to keep subsidizing them to sell more gas-guzzlers.

The new rules, proposed last week by the National Highway Traffic Safety Administration represent a big change in the Corporate Average Fuel Economy, or CAFE, standards.

Under current rules, automakers must meet a single average mileage requirement for their fleet of cars (27.5 miles per gallon) and a lower one for their fleet of light trucks (21 mpg this year, rising to 22.2 mpg in 2007).

When the standards were created in 1975, "the industry was dominated by cars. At that time, trucks were considered for commercial use," says Tom Libby, senior director of industry analysis for J.D. Power and Associates.

To qualify for the lower mileage requirements, carmakers have been pushing more cars into the truck category by adding features like seats that can be removed to create a flat floor.

"Now about 52 percent of the industry is trucks," says Libby. The category includes such vehicles as the PT Cruiser and Honda CRV.

The average fleetwide mileage requirement is weighted by sales. This has hurt U.S. companies because they sell more of the bigger trucks and SUVs, which get worse mileage than smaller trucks favored by foreign makers.

Under the proposed rules, light trucks would be divided into six classes based on their "footprint," or the area between their four wheels. Vehicles in each class would have to meet a single average mileage requirement.

However, a maker could go over in one class if it went sufficiently under in another class.

Between 2008 and 2010, carmakers can continue under the current system and meet a single fleetwide standard (rising gradually to 23.5 mpg by 2010) or they can start using the six-class system. Starting in 2011, they can only use the six-class system.

In 2011, the six requirements will range from 28.4 mpg for small trucks such as the Honda CRV to 21.3 mpg for large ones such as the Dodge Ram.

The new rules continue to exempt urban tanks weighing more than 8,500 pounds -- such as the Ford Excursion and Hummer H2 -- from any mileage requirement.

Consumer and environmental groups complain that the new rules don't increase mileage requirements enough to save money or the planet or decrease our dependence on foreign oil.

"They could have an increase (in gas mileage) two to three times what was proposed using off-the-shelf technologies that are standard and proven," says Don MacKenzie, vehicles engineer with the Union of Concerned Scientists. "Our analysis has shown these technologies could be deployed in 10 years to get light trucks up around 35 miles per gallon."

The automakers say that these groups underestimate how hard it is to improve mileage without sacrificing safety, utility or horsepower and that if consumers demand more fuel-efficient cars, they will make them -- with or without government regulation.

"We already have a pretty significant marketplace shift under way with fuel prices going up dramatically," says Christopher Preuss, a General Motors spokesman. "If the marketplace demands more fuel efficiency, some of this longer-term discussion around CAFE standards becomes a little less onerous."

Some technologies that could get wider adoption as a result of the new CAFE standards:

-- Cylinder deactivation: Also called displacement on demand, this technology shuts down half of a car's cylinders when it is cruising on the highway to save fuel. It is being used in eight- and six-cylinder vehicles such as the Dodge Ram, Charger and Magnum R/T; Chrysler 300C; Honda Odyssey; Pontiac Grand Prix; Buick Rainier; Chevrolet Monte Carlo, Impala and TrailBlazer EXT; GMC Envoy XL and XUV; and Cadillac Escalade, according to Kelley Blue Book.

-- Continuously variable transmission: This transmission doesn't have a conventional gear set, but varies the gear ratio depending on a vehicle's engine speed, "similar to the transmission in a snowmobile," says Jack Nerad, an analyst with Kelley Blue Book.

-- Six-speed automatic transmissions. Four or five speeds are standard but six are becoming more popular. General Motors plans to introduce six-speed transmissions on every model as it is reintroduced over the next few years, says Preuss. They are still not as fuel-efficient as manual transmissions, but manuals are hard to sell in the United States, he adds.

-- Variable valve timing: This optimizes the valve timing depending on engine speed.

-- Wider use of lighter-weight materials, such as aluminum and high- strength steel.

-- Improved aerodynamics: Preuss says GM's new line of full-size trucks, which will premiere later this year, will have a new profile designed for better mileage.

-- Hybrid engines: Automakers could increase the fuel economy of a particular class of trucks by leaving existing models alone but adding a hybrid model, powered by gasoline and electricity.

The move to improve gas mileage will accelerate if gasoline prices continue rising.

Kevin Tynan, an auto-industry analyst with Argus Research, says SUV sales were down about 7.5 percent in the first half of this year compared with the same period last year, largely due to higher gas prices. But they rebounded after General Motors introduced employee discounts, which were widely followed.

Libby of J.D. Power doesn't think demand will shift to more fuel- efficient vehicles unless gasoline prices "go over $3 and close to $4 and stay at that level for at least a year."

He says "power trains are much more efficient. A gallon goes farther with a V-8 than it used to." Plus, he adds, gasoline accounts for a smaller share of consumer income" than it did when gasoline prices spiked in the 1970s.

"We don't see in the near term a major dramatic shift," he says.

One danger of the new regulation is that "automakers will use this class-based system to shift to larger vehicles. If they can shift a vehicle into a bigger size class they will be subjected to a lower (mileage) standard," says MacKenzie. "They have not proposed any kind of provisions that would protect against that."

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