Fighting for American Industrial Renewal; Industry and Manufacturing Advocacy Group for public Education

EPA expected to exempt certain automakers from tougher pollution rules

The Obama administration proposes less stringent pollution standards for automakers that sell fewer than 400,000 vehicles a year in the U.S., to the benefit of several foreign makes.

"The German provision" -- as it has been called-- mirrors a California law that effectively exempts many foreign automakers from the same emissions standards as U.S. mass-market rivals. These rules are to be formally proposed by the Environmental Protection Agency and the Department of Transportation as part of a mandate to boost the Corporate Average Fuel Efficiency (CAFE) of their models to 35.5 miles mpg by 2016.

This proposal immediately benefits luxury builders such as Mercedes-Benz, BMW, Porsche, Audi, Lamborghini, etc., known for their single-digit MPG "supercars" that deliver a halo-effect in the marketplace, it would also apply to brands such as Volkswagen, (which offers a 15 MPG combined SUV), Mazda, Mitsubishi, Kia, Subaru, Jaguar, Land Rover and Suzuki, leaving them plenty of room to grow in SUV/truck segments.

BMW and Daimler will not say if they lobbied for this provision. However, for 2008, BMW and Mercedes sold approximately 300,000 and 250,000 vehicles in the US respectively. This provision allows about 100,000 units for growth. For the year 2007-2008, the U.S. collected $76 million in fines from auto makers based in Germany for violating fuel-economy regulations. Perhaps some justification could be made if the rule was set at 5000 units, but how does the EPA justify exempting almost a half-million units annually?

 

Although Chrysler sells less than 2000 of its specialty Dodge Viper sports car each year, this vehicle is included in Corporate Average Fuel Economy ratings, because Chrysler LLC typically sells about 2-million vehicles annually in the US. This makes it increasingly hard to justify the production of this vehicle, endangering the jobs of the men and women who design, test and build this automobile in the United States. This is true for GM workers who produce Corvettes, or virtually any North American job connected to the auto industry.

The rule creates a problem for specialty-market vehicles offered by large manufactures. These American "performance" vehicles are not only important for an auto company's image in the US, they help US companies make inroads (and headlines) in foreign markets; whether that means a Dodge Viper setting a record at Germany's Nurburgring race circuit, or top ratings for a car like the Cadillac CTS-V. In fact, no major US-based auto company would enjoy this EPA exemption.

In a quote from the Wall Street Journal, John Graham, who helped craft automobile fuel-economy regulations under President George W. Bush, says "Once companies become dependent on these provisions, they have an incentive to hire lobbyists and exert political pressure to extend those same provisions," In it's current form, the exemption would last 4-years (7-years in California).