- The Washington Times - Tuesday, July 31, 2001

The chief executive of General Motors Corp. cautioned yesterday that a congressional move to increase the fuel efficiency of automobiles would make vehicles more expensive and less safe.
Automakers would be forced to sell smaller vehicles made of more costly, lightweight materials to meet higher fuel standards, which is not what consumers want, said G. Richard Wagoner Jr., General Motors’ president and chief executive officer.
“We’re certainly not, and I don’t think Congress should be, in the business of mandating consumer choice,” Mr. Wagoner said at a meeting with editors and reporters at The Washington Times.
The House is scheduled to begin debate tomorrow on energy legislation that includes reducing gasoline consumption by sport utility vehicles (SUVs) and minivans.
To reduce consumption, the federal government would have to raise Corporate Average Fuel Economy (CAFE) standards that automakers must follow.
The standards, adopted by Congress in 1975 after the Arab oil embargo, require passenger cars to get an average 27.5 miles per gallon and light trucks, like SUVs, to get 20.7 mpg.
At the time, light trucks were allowed to get lower mileage because they were used mostly by farmers and small businesses. Now, SUVs and other light trucks account for half of U.S. vehicle sales.
House Democratic lawmakers are expected to offer an amendment to the bill that would require SUVs and other light trucks to get the same mileage requirements as passenger cars.
Mr. Wagoner criticized the proposed CAFE standards the same day the National Academy of Sciences released a report saying fuel economy could be boosted as much as 20 percent for cars and 42 percent for SUVs using the latest engine technologies. But the report also cautioned about tradeoffs, including a potential increase in traffic deaths.
The findings are expected to be pivotal in the congressional debate.
President Bush has said he wanted to await the academy’s findings before deciding whether to seek tougher federal standards for the automakers.
“The study is something that we find encouraging,” White House spokesman Ari Fleischer said yesterday. “The National Academy [of Sciences] study highlights the promise of technologies and reforms that could both increase mileage, and it also takes into account the problems that are created with lighter vehicles increased deaths on the road as a result of lighter vehicles.”
The report says cost-effective increases in fuel efficiency of cars and SUVs are achievable without dramatic reductions in vehicle size and weight if they are phased in over the next 10 to 15 years.
Mr. Wagoner said General Motors has researched alternatives to the century-old internal-combustion engines such as hybrid electric vehicles and fuel cells but found them to be prohibitively expensive. Instead, the company would have to replace the steel in its automobiles with aluminum and magnesium, he said.
“If you do the math on it, the consumer will never pay for it,” Mr. Wagoner said. “We obviously don’t think [the CAFE standards are] very well thought out.”
He also predicted automobile collision deaths could rise with lighter vehicles. Motorists rate safety as a higher priority than fuel efficiency, he said.
“Obviously, CAFE could have a very negative effect on safety,” Mr. Wagoner said. “It’s just physics.”
Mr. Wagoner, who became CEO in June 2000, is meeting with congressional and industry representatives this week trying to win a reprieve on the proposals that have come to dominate concerns of automobile executives.
If Congress would wait about 10 years, their concerns about fuel consumption and pollution would diminish as new technologies enter the mainstream, he said.
“Fuel cells could be that answer,” Mr. Wagoner said.
Fuel cells are power plants that create electricity by combining oxygen from the air with hydrogen, leaving a mist of water as a byproduct. They require little or no gasoline to operate.
Mr. Wagoner said the world’s largest automobile manufacturer is spending $100 million a year in research and development on the technology.
The company is reducing the number of products it sells from about 100 automobiles to the high 60s, he said. While the company plans to expand its Hummer and Saturn brands, it plans to shrink its midsize markets and eliminate poorly performing brands, including possibly the GMC Safari and Chevrolet Astro midsized vans.
Mr. Wagoner stopped short of saying the Baltimore plant where the vans are assembled would be closed.
However, he acknowledged that an Allison Transmission plant GM opened in White Marsh, Md., is intended to provide job opportunities for the company’s employees in Baltimore. The Baltimore assembly plant employs about 1,500 workers. The White Marsh plant is planned to employ more than 700.
“I’m not sure when we’ll make a final call on Baltimore and the Safari,” Mr. Wagoner said. “It’s not imminent.”
General Motors posted a profit of $477 million in the second quarter ended June 30, a 73 percent drop from a year ago. Mr. Wagoner blamed the slowing economy, but said he expected sales to pick up soon.
Second-quarter sales dropped 5 percent to $46.1 billion from a year ago.
The company’s market share has been dropping in recent years, largely a result of foreign competition and globalization, he said.
General Motors controls about 28 percent of the U.S. auto market and 15 percent of the global market. When he started working for the company in 1977, General Motors controlled 43 percent of the U.S. market.
Mr. Wagoner sees Asia, particularly China and South Korea, as a big growth market. Currently, General Motors controls only about 3 percent to 4 percent of the Asian market.
“We do think we want to play in that market,” Mr. Wagoner said.
The company’s stock closed at $62.90 yesterday, unchanged on the New York Stock Exchange. It has traded as high as $67.04 and as low as $50.93 in the last six months.

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