Obama Administration Offers Concessions on CAFE Standards to Domestic Automakers

According to a recent article in The Wall Street Journal, the Obama administration has indicated that it will give Ford Motor Company, General Motors Company and Chrysler Group more time to increase the fuel economy of its larger light trucks and SUVs in hopes of reaching a deal on new mileage standards as early as this week. The White House is pushing for a Corporate Average Fuel Economy, or CAFE, of 56 mpg by 2025 — more than double the current standard.

The proposed 56 mpg CAFE standard is down from the administration’s previous target of 60 mpg or higher by 2025. The current target for CAFE is 35.5 mpg by 2016.

According to people familiar with the negotiations, the Obama administration floated a number of proposals last week in an effort to break the stalemate with automakers which have opposed the tougher mileage standard.

One such proposal would allow fuel economy standards for light trucks to increase by 3.5 percent per year — 2 percent lower than the 5 percent annual improvement proposed for passenger cars.

In an email to the Washington Post, White House spokesman Clark Stevens said, “We continue to work closely with a broad range of stakeholders to develop an important standard that will save families money and keep the jobs of the future here. A final decision has not been made, and as we have made clear we plan to propose that standard in September.”

The new CAFE standards could have a significant effect on Detroit’s Big 3 automakers which dominate the large truck market — a market that generates huge profits. Despite new models from Toyota and Honda, Ford, Chevrolet and Ram remain the best-selling brands in the large truck segment.

Japanese and Korean automakers, which dominate the small truck and small SUV markets in the U.S. have argued that the proposed rules would give domestic automakers an unfair advantage. They also claim the rule would defeat the federal government’s goal of reducing consumption and lowering greenhouse gas emissions by encouraging consumers to buy less fuel-efficient models.

The Toyota Tacoma is one of the best-selling small trucks and the Toyota RAV-4 and Honda CRV are among the best-selling small SUVs in the U.S.

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