New Calif. emissions rules may hurt automakers
Reuters / September 28, 2004
DETROIT -- Automakers face the expensive prospect of overhauling car and truck designs if California's reduced emissions rules go through, an auto industry group said Monday.
California air-quality regulators on Friday adopted the nation's first rules to reduce emissions of carbon dioxide and other gases in cars and trucks by as much as 25 percent, beginning with the 2009 model year, with cuts accelerating to as high as 34 percent in 2016.
The regulations must still be approved by the California state legislature.
"They are proposing that we build vehicles that don't exist today using a combination of technology. It's a theoretical vehicle," Gloria Berquist, spokeswoman for the Alliance of Automobile Manufacturers said Monday.
The group represents many automakers including Ford Motor Co., General Motors, DaimlerChrysler AG and Toyota Motor Corp.
Automakers argue that too many rules could add costs that consumers may not be willing to pay.
The regulations, which are likely to prompt tough pollution standards in other states, are expected to raise the price of new vehicles by about $3,000, according to industry analysts.
California's action comes at a time when the auto industry, especially automakers in Detroit, is weighed down by profit-eroding incentives and slowing sales. A key issue for Detroit is whether the lower emission standards can be engineered into vehicles at manageable costs.
"A 25 percent improvement in emissions can only come about with 25 percent improvement in fuel economy," said Sean McAlinden, chief economist at the Center for Automotive Research.
That could force automakers to pare sales of gas-guzzling SUVs and pickup in California, which accounts for nearly 13 percent of the U.S. auto market.
Automakers will also have to retool engine and assembly plants to put the technology in place, McAlinden said.
But some say the costs will be recovered in a few years.
The Union of Concerned Scientists, a Washington, D.C., environmental group, said the technologies will pay for themselves in about three-and-a-half years.
"This regulation is among the most cost-effective to date, with virtually all of the technological improvements paying for themselves before the new-car smell is gone," Louise Bedsworth, senior vehicles analyst with the Union of Concerned Scientists said in a statement.
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