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US car industry right to sweat over Obama's new rules

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Richard Cable | 12:48 UK time, Wednesday, 20 May 2009

US President Barack Obama has just announced America's first efficiency targets for new cars, and it looks like he might have played a blinder.

Under his proposals, new vehicles will have to demonstrate a 5% increase in efficiency per year between now and 2016. This means that within seven years new passenger cars in the United States will average 42 miles per gallon, compared to about 45mpg at the same stage for European cars.

chevy226x226.jpgTiming is everything. The US car industry has traditionally held plenty of sway in Washington, making this move unthinkable just a year ago, but it's much more compliant following its multi-billion dollar government bailout.

At the same time, the plan neatly defuses potentially bloody court battles between the federal government and individual states that wanted to challenge the Clean Air Act and set their own, more stringent, emissions targets.

And it's been cunningly spun as well. With the environment sliding down the agenda for US voters (the proportion of Americans viewing it as top priority has fallen from 56% to 41% since 2008), this has been played instead as a measure to reduce American reliance on dodgy foreign fuel imports (by 1.8 billion barrels to 2016) and put more money in drivers' pockets. It might make cars more expensive initially, says Obama, but the savings on gas over the lifetime of the vehicle will be bigger.

Meanwhile overseas, where debate tends to be focused on the US as a major carbon emitter, it is being described as an environmentally-friendly 'emission cap' equivalent to taking 177 million cars off American roads.

But whichever way you choose to look at it, there's no denying that all car manufacturers should be striving to make ever more efficient vehicles regardless of legislation, for the benefit of the consumer and to secure a competitive edge. Failure to do so is arguably a form of industrial complancency that deserves to be punished.

Which is why the only ones who aren't overly enamoured with Obama's proposals are US car manufacturers themselves, who have grudgingly accepted this 'regulatory certainty' but will no doubt be sweating on the fact that car manufacturers who already have more efficient models - namely the Europeans and Japanese - will be rubbing their hands with glee at the scale of the opportunity.


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