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Tougher Gas Mileage Rules: Some Makers Are Way Ahead

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54.5 MPG CAFE standard for 2025

54.5 MPG CAFE standard for 2025

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Several Japanese automakers are off to a great start meeting future emissions and gas mileage targets, according to the latest EPA data.

As rules become ever more stringent requiring automakers to build cleaner, lower-consumption cars, Toyota, Honda and Nissan already build cars that meet targets several years in the future.

According to Automotive News, the three companies are so far ahead of other automakers they could essentially sell their current vehicles all the way through 2016.

Not that they're likely to do so, of course.

"A lot of pickup trucks"

It's all based on the Environmental Protection Agency's credit system, where automakers gain credits for building cars that undercut targets for emissions and gas mileage, and lose credits for breaking that limit.

At the start of the 2012 model year, Toyota held 86 million EPA credits--in other words, an 86 million metric-ton carbon-dioxide buffer between it and heavy fines for not meeting targets.

That gives the company huge freedom in its model portfolio--"Worth a hell of a lot of pickup trucks if they decide to sell more pickup trucks," as the Safe Climate Campaign's director Dan Becker puts it.

Alternatively, one other automaker suggests it gives Toyota the opportunity to promote performance more heavily if required. If the company sells a high-performance sports coupe, its emissions and gas mileage wouldn't matter so much, because they would be offset by all the Prius and other hybrid model sales.

Toyota could even sell some of its credits to other automakers.

Honda held 36 million credits by the same point, and Nissan 18 million. Among the Detroit Big Three, General Motors held the most credits with 25 million, while Ford's 15 million tally and Chrysler's 8 million both fell during the 2011 model year.

Some automakers are doing even worse--Daimler, which controls Mercedes-Benz and Smart, held less than 379,000 credits by the 2012 model year. Unsurprisingly, the company has opposed the proposed Corporate Average Fuel Economy (CAFE) targets.

Tough times ahead

While Toyota could play fast and loose with its credits, like putting an armful of free casino chips on a high-stakes game, it's unlikely to do so.

Between 2017 and 2025 fuel economy standards will become particularly strict, and no carmaker is willing to be left behind as the industry moves forwards.

The credit buffer held by the Japanese automakers, and indeed GM, will help insulate them as tougher regulations come into force, giving them time to develop competitive, less consumptive products in the future.

While the EPA's standard for handing out credits has since changed, from a per-manufacturer standard to a per-vehicle standard, the Japanese automakers feel their credits were fairly earned .They were making more efficient cars than the competition long before the system was put into place, and can now reap the benefits.

It's unclear just what the automakers will do with the credits, though.

Credits earned before 2009 can be used for up to five years. Any since can be used up until the 2021 model year, giving car companies plenty of options.

Most, the EPA predicts, will be used simply to "plan a smooth pathway" to the emissions standards required by the 2025 model year.

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Comments (4)
  1. Why are they penalysing the american car compagnies ?
     
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  2. The only one penalizing American companies are the companies themselves. Your question should be: Why aren't American car companies on the top of the list? Why are they behind?

    It is interesting to hear GM and Ford and Chrysler complaining that the new standards will cost more and hurt business, while the companies that already have adopted the standards are among the most profiting ones and have not needed any tax-payer rescue dollars.
     
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  3. That is b/c American auto makers traditionally sell far more SUV and Pickup trucks than small cars such as Prius. That is their cookie butter income source. If you take away their income, they will complain.

    Someone has to make a pickup trucks or SUV.

    Toyota's SUV and Pickup trucks aren't exactly fuel efficient. So, in a way, it is penalizing the car companies that primarily focus on SUV and pickup trucks.
     
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  4. The American auto makers for years discounted the public wanting efficient cars and instead of making them more fuel efficient, made them more powerful and larger. They built their business model around the profitability of leviathan vehicles like four-door family pickup trucks and sport utility vehicles. Every time the price of fuel starts to bother people, American brands sales fall flat because they have nothing to offer that has a reputation for fuel economy. The government didn't do it to them, they do it to themselves. In the same way, people who bought them whine when they go broke fueling their enormous vehicles. They are reaping what they have sown.
     
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