To turn a buck, fuel efficiency a must
DETROIT • U.S. automakers have underestimated the importance of fuel efficiency to consumers, but new federal standards are expected to help the companies turn a profit, according to the results of a University of Michigan study released Monday.
Researchers at the UM Transportation Research Institute said plans for vehicles to be 30 percent more efficient by 2016, along with federal intervention at General Motors and Chrysler, are forcing the companies to pay closer attention to fuel efficiency when designing new cars, something the automakers failed to do in the past.
At times there was a concerted effort by company officials to discount the results of consumer research when making planning decisions, said the authors of the report, also former GM employees.
“It is standard practice to discount consumer research. It was only applied to safety and quality issues,” said Walter McManus, director of the automotive analysis division for the institute and co-author of the study.
He said people abandoned American-made vehicles in favor of fuel-efficient Japanese models, leading to the downturn of all three automakers.
But U.S. automakers now have a chance to catch up, as vehicles must average 35 mpg by 2016. The study estimates a combined $3 billion in annual profit for the Detroit companies as consumers gain greater options for more fuel-efficient vehicles.
“They confused people staying away from fuel-efficient, small cars as not liking fuel economy, instead of the fact that they made mediocre cars that no one wanted,” said Rob Kleinbaum, co-author of the study and managing director of RAK & Co. “If GM had followed its own research, it would likely not be in Chapter 11 (bankruptcy protection) today.”
DETAILS
The Energy Department is lending money to the Ford Motor Co. from a $25 billion fund to develop fuel-efficient vehicles, congressional officials said Monday.
Energy Secretary Steven Chu was scheduled to make the announcement today in Dearborn, Mich., the officials said. They requested anonymity because an official announcement was pending.
Dozens of auto companies, suppliers and battery makers have sought a total of $38 billion from the loan program. Ford has asked to receive $5 billion in loans by 2011, but it was unclear how much funding the automaker would receive.
The Energy Department did not immediately comment on the plans. Chu has not yet announced the first recipients of the loans, which have been closely watched by members of Congress from states with auto plants and suppliers.
Congress approved the loan program last year to help car companies and suppliers retool their facilities to develop green vehicles and components such as advanced batteries.
The Associated Press
America the Beautiful Park is not so beautiful. Photo by (The Gazette/Jerilee Bennett)





