CAFE Craziness: Could Hill-Terry bill save the RWD V-8?
Capitol Hill is getting close to voting on energy policy legislation that may determine the fate of many domestic, and even foreign, new-car programs. Fate of the modern rear-drive V-8 sedan may hang in the balance. The Detroit Free Press reports that Representative Ed Markey, Democrat from Massachusetts, is backing down from his proposed Corporate Average Fuel Economy standard update for the next decade.
First, the Markey issue. The Freep says Markey won't push for his latest proposal, a 35-mpg CAFE average for cars and trucks by 2019, when Congress returns to the Hill in September after its summer recess. Markey was expected to attach his CAFE bill to an energy bill the House is scheduled to take up on August 3. You can thank Markey's fellow Democrat in the House, John Dingell of Michigan, for pressure to back down.
House Speaker Nancy Pelosi, who had been caught between Markey and Dingell over the fuel economy debate, thanked Markey for stepping back Wednesday in order to smooth passage of the energy bill," Justin Hyde reports in the Freep.
The good news is Markey last week quietly dropped the toughest component of his proposal, a 4-percent-per-year increase after the bump to 35 mpg (originally proposed for 2020). When his amended proposal went nowhere, he added his support to the Senate bill, which calls for a 35-mpg CAFE for cars and trucks beginning in 2020.
If the House approves its Energy Committee's bill Friday, the two chambers go to conference for alignment. When that happens, the Alliance of Automobile Manufactures, called "the Dinosaurs of Detroit" in a recent USA Today editorial column and composed of GM, Ford, Chrysler, and Toyota, will lobby for the Hill-Terry bill. Representatives Baron Hill, D-Indiana, and Lee Terry, R-Nebraska, have sponsored a bill that calls for a 35-mpg car standard and 32-mpg truck standard by 2022. Hill-Terry is said to have growing support in the House, including that of the 47 conservatives Democrats in the Blue Dog Coalition.
If you're politically inclined, you should let your members of Congress know what you think -- pro or con on any of these proposals. Hollywood stars are urging the public to contact Congress to support the toughest CAFE standards at a Web site called cleanmyride.org.
What difference does three mpg and two years make for light trucks sold in the U.S.? Hard to say at this point, what with more diesels, hybrids, gas direct-injection engines with stop/start capability, plug-in hybrids, and even possibly hydrogen fuel cells on the horizon. Best I can do is use the example of Honda, once again. Remember, it sells no body-on-frame trucks and only fours and V-6s -- no V-8s.
For 2006, American Honda's (Honda and Acura) CAFE was 29.1 mpg. Honda/Acura cars achieved 33.9 mpg and Honda/Acura trucks averaged 24.7 mpg. Reaching either the Senate bill's 35 mpg or Hill-Terry's 32 mpg will take more than restricting production on Acura MDXs (and thus driving up the transaction prices) and bumping up CR-V volume and putting $3000 on the hood. You can bet Detroit-area engineers already are at work on plug-in hybrid four-door hatchbacks with the flat load floors to qualify as trucks.
So the big question is, would Hill-Terry greenlight projects like a rear-drive Chevy Impala and a production version of the Ford Interceptor?
I suspect the CAFE proposals have been used as red herrings for GM and FoMoCo, that they've let word get out that such projects are on hold as long as Rep. Markey was fielding Draconian proposals. Fact is, the RWD Chevy Impala has another issue: making a business case. Chevy sold 290,000 of the FWD variety last year, while Dodge sold just 154,000 Chargers and Magnums. On the other hand, if the new Chevy Malibu can pick up front-drive Impala buyers, then GM could have a platformmate to amortize the tooling costs for its Camaro assembly line.
Ford's situation is stickier. It has ancient rear-drive sedans to replace (it sold 158,000 Crown Vics, Grand Marquis, and Town Cars last year, and made money on every one of them). But it doesn't have any wiggle room to spend money on a new platform.
GM's and Ford's excuses, whispered as "many good programs are on hold" should go away if and when Hill-Terry is approved. I don't think you'll hear any positive word on RWD Impala until Chevy sells 300,000 Malibus per year, and on Interceptor until Ford makes a yearly profit, which won't happen until after 2009."