It’s getting a little predictable. Go to a big car event like the North American International Auto Show or the Society of Automotive Engineers (SAE) World Congress and you’re going to see politicians and government officials. I suppose that’s to be expected, but to be honest, I’m a little ticked off at how our public servants get a large megaphone at those events without bearing any of the costs that you, I, or a car company would have to pay for for the same treatment.
For the past three years particularly because of the meltdown of the domestic automakers, the bailout and the US Treasury’s subsequent stakes in GM (still held) and Chrysler (divested so that Fiat could own more), but really since the beginning of time, politicians and auto shows went together. I remember, after a press conference where Wayne County (MI) executive Robert Ficano exchanged gifts with the chairman of the People’s Army owned automaker Changfeng, asking Mr. Ficano just how many Changfeng employees voted in Wayne County. During the ’08 presidential election, most of the primary candidates on the Republican side visited the show’s press preview.
Over a month ago now, I was told by several people who should know that the 2025 CAFE standard “number” would fall between 60 MPG and 50 MPG. When I pressed for details, the only answer I got was “at or slightly under 55 MPG.” So when the Obama Administration opened the haggling at 56.2 MPG, I wasn’t sure if he would stand fast by that number or come down a little. Certainly the auto industry and its allies have been portraying the 56.2 MPG proposal in apocalyptic terms, running attack ads against it like this one hosted at the Freep [MP3]. And apparently the opposition paid off, as the WSJ [sub] reports that the Obama Administration has caved, reducing its proposal from 56.2 MPG to 54.5 MPG… and that’s not all. According to the report
The plan calls for a 5% average annual increase in fuel economy for cars and a 3.5% increase for light trucks through 2021. After 2021, both cars and trucks face a 5% annual increase… Included in the plan are credits for hybrid vehicles—including large trucks —and measures that will give big pickup trucks and sport-utility vehicles more leeway in meeting the target.
We’ll have to wait to see the proposal in detail before we know for sure what happened here, but it seems that the industry has largely gotten what it asked for. Not only is the overall number decreased, but truck compliance has been slowed and “advanced technology credit” loopholes appear to have been expanded. This is fantastic news if you sell a lot of trucks and SUVs, and not so fantastic if you care a lot about dramatically reducing fuel consumption over the next 10 to 15 years. But again, we’ll just have to see what specific proposals are included in the new deal, and how automakers react before we jump to too many conclusions.
A third jurisdiction in Orange County, California is taking steps to ban the use of red light cameras. Later today the city council in Orange will vote on the first reading of an ordinance that would deter future councils from considering the devices. The city of 136,000 residents has never used photo enforcement, but the council unanimously directed the city attorney’s office in October to come up with the most effective language to deter future councils from considering them.
A Washington-based spokesman for the automaker, Greg Martin, said the effort is to make sure policy makers “are aware of GM’s contribution to our nation’s economic and competitive strength.”
GM has a broader story than just profits and sales, he said.
“GM has started an ad campaign in select Washington publications because there’s more to GM’s resurgence than just increased sales and profitability,” Martin said. “GM is also an auto company investing heavily in America’s future, creating new jobs and inventing solutions and technologies that will make a real difference in energy and safety.”
But the waves of coming auto-related regulations may not actually have motivated the ad so much as the fact that the government is likely to sell off its remaining 26% share in GM by the end of the year (if not by the end of the Summer), and they’re facing an $11b loss at current stock prices. By emphasizing that the auto bailout created a positive corporate citizen rather than just a newly-profitable company, GM likely hopes to convince the government that the political downsides of taking a big loss on The General was ultimately worth it. And that’s an important PR step in the short term as well, as CAFE negotiations are giving rise to bailout-tinged rhetorical attacks on the automaker. For example, Ralph Nader tells the Freep
We give GM billions of dollars, and what do taxpayers get in return? Opposition to a policy that will clearly save them money and give them better cars,
Dare to suggest that a strong CAFE standard won’t ruin any automaker, and you’ll be overwhelmed by deafening cries of “what about the market,” “think of consumer choice,” and “don’t you tell me what to drive.” Now, I’ve made it very clear that I’m not a huge CAFE fan, but the fact of the matter is that since nobody is leading a charge for a gas tax (least of all the industry that says it would be a good thing) it’s the only option on the table. Which leaves just one question: why regulate fuel economy at all? There are all kinds of arguments against regulating fuel economy, but most stem from a desire to “let the market do its thing.” That’s an argument I’m highly sympathetic towards, but it doesn’t necessarily require that the government but out and let the era of cheap, thirsty trucks roll on unabated. What maybe, just maybe, if the market actually wants more fuel economy? Well guess what campers… according to research by IHS Global Insight [via Automotive News [sub], the market does want more fuel economy.
Driving with extreme care can be evidence of a crime, according to a ruling Thursday by the Wisconsin Court of Appeals. Motorist Kevin J. Burch was driving his pickup truck through West Salem at 12:44am when a police officer took notice. The officer watched as the truck slowed to a near stop at an intersection, even though there was no stop sign. At the next block, Burch again came to a full stop before proceeding. There was no other traffic nearby. The officer had taken a “drunk driving course” and found the driving suspicious — especially since he said it was “bar time.” The officer conducted a traffic stop.
California has backed up its strict emissions standards for years now with a $5,000 tax credit for electric, hybrid and fuel cell vehicles, which when combined with a $7,000 federal tax credit can often make those vehicles nearly as affordable as “regular” cars. But, reports Automotive News [sub], that state credit has fallen victim to California’s budget woes and oversubscription, and has been cut in half from $5,000 to $2,500. According to the report:
high demand exhausted the program’s funding last month. The Los Angeles Times reported Thursday that about 500 consumers who bought electric cars such as the Nissan Leaf or Tesla Roadster are on a waiting list and will collect the $2,500 rebate.
To deal with growing demand, the pool of money to fund the rebates was increased to between $15 million and $21 million for CARB’s current fiscal year ending June 30, 2012, according to CARB’s announcement. A total of $11.1 million was allocated in the program’s first two years, according to CARB spokeswoman Mary Fricke.
The increased cash pool and lowered rebate amount are aimed at making the incentive available to more consumers, according to CARB’s Web site. The changes are projected to fund about 6,000 rebates for consumers who apply for the program on a first-come basis, Fricke said.
Now California “green car” intenders not only get a reduced tax credit, but they also don’t get free access to the HOV lane anymore. It’s almost as if California wants “green” vehicles to succeed or fail on their own terms…
But recent blast tests show that Humvees built with the new chimney could provide as much protection as some of the heavier, and more costly, mine-resistant vehicles that have replaced them in many uses.
And if the final tests go well, the invention could save billions in new vehicle costs and restore much of the maneuverability that the Army and the Marines have lacked in the rugged terrain in Afghanistan, military officials say. Engineers say the chimney, which rises through the passenger cabin, releases some of the explosive gases — traveling at twice the speed of a fighter jet — that have mangled and flipped many of the vehicles.
Pentagon officials have said little about the 11 blast tests so far, in which the prototype vehicles are engulfed by a cloud of smoke, dust and fire, but the passenger cabin remains intact.
It turns out that adding armor hurts the maneuverability that makes the HMMWV so prized, and is less effective than the new chimneys which deflect blast forces around and away from the passenger compartment. The military will conduct five more blast tests and could request bids for the new generation of HMMWVs sometime this fall.
The Michigan Congressional delegation’s letter, stating that the Detroit-based automakers are not technologically capable of serving the market while complying with a proposed 2025 CAFE standard seemed strange to me in light of the recent progress made by Ford and GM on fuel economy. Why, I wondered, would these firms boast of their fuel econmy efforts on the one hand while allowing their congressional representatives to portray them as unable to build a CAFE-compliant fleet on the other. Why, I wondered, don’t Ford and GM come out and angrily insist that they can build the most fuel efficient cars in the world? My guess: because they know that they can probably wheedle a loophole out of the feds if they keep pleading inability. Yes, everyone knows they can comply with CAFE… but even the UAW knows that when the government asks you to do something, you ask for something back. Which in turn made me wonder: what might the OEMs want? And, turning to the 2012-2016 CAFE Final Rule [go on, give it a read in PDF format here], I found a glaring loophole that all the manufacturers seemed to want, but which the feds turned down. I have no evidence that this is back on the table for 2017-2025, but I thought I’d put it out there to give a sense of what the OEMs may be pushing for by pleading inability to comply with the proposed 2025 standard.
The Governor’s Highway Safety Association has reviewed a number of studies on distracted driving, and its report [PDF here] shows a number of disturbing findings. A few of the highlights (or is that lowlights?):
At least one driver was reported to have been distracted in 15% to 30% of crashes at all levels, minor to fatal. The proportion of distracted drivers may be greater because investigating officers may not detect or record all distractions. In many crashes it is not known whether the distractions caused or contributed to the crash.
In almost 80% of all crashes and 65% of near-crashes the driver was looking away from the forward roadway just before the incident and that secondary task distraction contributed to 22% of the crashes and near-crashes
about two-thirds of all drivers reported using a cell phone while driving; about one-third used a cell phone routinely. In observational studies during daylight hours in 2009, between 7% and 10% of all drivers were using a cell phone… about one-eighth of all drivers reported texting while driving. In observational studies during daylight hours in 2009, fewer than 1% of all drivers were observed to be texting.
Cognitive distractions by themselves – thinking about something other than driving, without any manual or visual distraction – can affect driving performance. Two recent studies reinforce the conclusion that distractions affect the mind, not just the eyes, ears, or hands
[Two] studies found that crash risk was about four times greater when using a cell phone. Hands-free phones did not appear to be any safer than hand-held phones.
In the only study of texting bans, HLDI studied their effect on collision claims using the same methods as their 2009 study of cell phone laws. They concluded that texting bans did not reduce collision claims. In fact, there appears to have been a small increase in claims in the states enacting texting bans compared to neighboring states… there is no evidence that cell phone or texting laws have reduced crashes.
If you’re at all interested in a relatively concise (50 pages) overview of the state of distracted driving research, this report is well worth a download. Ultimately, though, the report offers more challenges than easy answers, as it largely debunks the notion that increased enforcement or hands-free laws make much of a difference in the problem. [via AutoObserver]
An anonymous tipster has sent us a copy of a letter from the Michigan congressional delegation to President Obama [PDF here, or hit the jump for an embedded copy], which calls his proposal for a 56.2 MPG CAFE standard by 2025 “overly aggressive and not reasonably feasible.” The letter is remarkable in the sense that the major signatories are Democrats, and yet it attacks the President’s proposal with more vigor than many inside the industry. The letter also confirms that that the Detroit-based automakers already rely on CAFE’s “credit” loopholes in order to meet the 2012-2016 standard, a stunning admission of how far behind Detroit still lags in fleet fuel economy. And rather than taking responsibility for their situation, the MI representatives blame CAFE for Detroit’s low fleet efficiency, arguing that “manufacturers that produce primarily smaller vehicles will have an unfair advantage.” Moreover, the MI reps don’t just admit that Detroit is behind its competition, but even goes as far as to argue that “the overall targets currently proposed may exceed what is technologically achievable for the the US automakers that produce and sell the majority of the larger pickup trucks and sport utility vehicles that US families and businesses -and tens of thousands of autoworkers- depend on.”
In short, the letter strikes me as a shockingly old-school display of excuses and apologia that stands in sharp contrast to the “green car revival” narrative that Detroit and D.C. pushed so hard during the bailout. And frankly, I’d be embarrassed if I ran one of the largest automakers in the world and I was reduced to pleading my inability, on technological grounds no less, to achieve a 56.2 MPG fleet average (which in “window sticker” terms, translates to about 41 MPG EPA) within 15 years… even though CAFE is riddled with loopholes that make it easier to continue building thirsty trucks. If Detroit were actually leading the charge for a gas tax (or offering any kind of market-driven alternative), it might have some credibility on this issue, but as things stand this strikes me as nothing more than whining. So much for America’s “can-do” spirit…
On Sunday red light cameras will begin issuing citations once again in Houston, Texas despite the election result of November where a majority demanded the devices be taken down. US District Court Judge Lynn N. Hughes continues to deny the ability of the sponsors of the anti-camera initiative, Randall Kubosh and Francis M. Kubosh, to defend their effort against an election challenge mounted by American Traffic Solutions (ATS). Hughes on Wednesday ordered several legal arguments by the Kuboshes erased from the record.
“In court pleadings, the Kuboshes may not denominate themselves as intervenors, counter-defendants, third-party defendants, respondents, or anything else that they are not,” Hughes wrote in a separate July 7 order striking another legal brief. “In public, they may call themselves whatever they want.”
On July 21, 2011, Fiat North America LLC, a wholly-owned subsidiary of Fiat S.p.A. (collectively, “Fiat”), acquired beneficial ownership of the membership interests in Chrysler Group LLC (the “Company”) held by the U.S. Department of the Treasury (“U.S. Treasury”) and the Canadian government’s special purpose entity, the Canada Development Investment Corporation (“Canadian government”). Fiat acquired 98,461 Class A membership interests in the Company from the U.S. Treasury, representing approximately 6 percent of the fully-diluted ownership interest in the Company for cash consideration of $500 million. Pursuant to a separate agreement, Fiat paid $125 million to acquire 24,615 Class A membership interests in the Company from the Canadian government, representing approximately 1.5% of the fully-diluted ownership interest.
Pursuant to these self-funded transactions, Fiat became the owner of a majority of the membership interests in the Company. Fiat now holds 55.3% of the Company’s outstanding equity, or 53.5% on a fully-diluted basis, taking into account the occurrence of the third and final Class B Event described in the LLC Operating Agreement which is expected to occur by the end of 2011. The remaining equity in the Company is owned by the UAW Retiree Medical Benefits Trust, a voluntary employees’ beneficiary association trust (the “VEBA”).
Public employees can take rides on toll roads at taxpayer expense, but these trips are not subject to disclosure according to a ruling Tuesday by the Pennsylvania Commonwealth Court. A three-judge panel denied the freedom of information request of the Harrisburg Patriot-News for E-ZPass transponder usage information data by for employees of the Pennsylvania Turnpike. On October 21 the paper sought details on the 2000 toll collectors who do not pay for use of the road, regardless of whether the travel was job related.
With environmentalist groups on the warpath over forthcoming 2017-2025 CAFE standards, trucks sitting on lots, and the Flint HD Pickup plant idled for much of the month, this is probably not exactly the moment GM might have chosen to put $328m into tooling for new full-sized pickups to be built at Flint. But time and the market wait for no company, and because the Silverado is GM’s single best-selling product, the investment isn’t tough to justify:
“Truck sales play an important role in the success of General Motors,” said Joe Ashton, UAW-GM Vice President. “We are confident that the next-generation of trucks will continue to be an important source of revenue for the company and jobs for our members
In case there’s any confusion though, GM is making perfectly sure nobody thinks they’re making any product choices because of union demands. At the investment announcement ceremony at Flint, Cathy Clegg, GM vice president of labor relations told Reuters [via Automotive News [sub]]
We certainly aren’t going to make a decision and make a commitment solely as a way of getting an agreement. If the market doesn’t drive it, we can’t do that
Photo Credit: Autoblog Green
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