WASHINGTON – There is a lot of smoke, but the question is where’s the fire?

You can call it paranoia; you can call it the boy who called wolf; or you can say it is Chicken Little, but the American International Automobile Dealers Assn. is convinced the very livelihood of dealers selling import brands is in danger.

Last week, leaders of the trade association along with members of the Association of International Automobile Manufacturers (AIAM) and Americans for Free International Trade PAC gathered here at the first International Auto Industry Summit to lay out what they perceive to be the greatest threats.

Other than the alternative minimum tax, which Congress may try to increase next year, the issues about which AIADA is sounding the alarm are not new. However, because of the current Democratic-controlled Congress, there is a sense of urgency not seen since the mid-1990s.

Attempts to increase the corporate average fuel economy (CAFE), the rhetoric against free trade and the perceived possibility that politicians, in order to protect or help American businesses, may create a more difficult environment for foreign companies, such as auto makers, concern AIADA leaders.

But it appears there is a lot of smoke with little fire at the moment. Democrats in Congress this year have shown little desire to accomplish any real legislation.

Republican Rep. John Campbell, a former California dealer, cautions AIADA members not to be fooled.

“The Democrats are waiting this year out,” he says. “This Congress likely won’t pass much legislation in the next two years.”

The strong possibility of a Democrat being elected president along with 61 seats open in the House of Representatives means there may be a better political climate in which to accomplish their agenda, says Campbell.

AIADA’s leadership is not waiting to light a fire under its members.

Jim Press, president-Toyota Motor North America Inc. and this year’s AIAM chairman, begins the urgent rhetoric during a reception at the summit, saying this year’s “Congress was elected on the back of protectionism.”

Press also takes several sarcastic swipes at Congress for suggesting auto makers should increase CAFE of their fleets 4% a year for perpetuity.

A few minutes later, AIADA Chairman and California dealer John Hawkins tosses his prepared notes and instead opts for more fiery language telling attendees, “Bad things can happen very quickly. Our friends on Capitol Hill are hell bent on having a hanging,” he says of the CAFE debate. “If they lose an auto maker in the process, so be it.”

About the politicians discussing such a scenario, Hawkins says, “They are so unrealistic, you don’t even know where to start the dialogue. Environmentalism has become a religion. People in Washington are worshiping at the temple of climate reform and Al Gore is the high priest.”

Don Beyer, who owns franchises in northern Virginia and who served as last year’s AIADA chairman, smiles when he hears Hawkins’ comments. One of the few dealers who is a Democrat, Beyer says he is used to the Republican-friendly rhetoric.

Taking a more moderate position, Beyer points out, “If we had raised CAFE 2% several years ago when we had the chance, then we wouldn’t have to raise it 4% now.”

Meanwhile, Jack Fitzgerald, another Virginia dealer known for his “green” initiatives tells Ward’s, “We have to raise CAFE. We just can’t be so reckless about it.”

Mike Stanton, AIAM president and CEO is resigned to a CAFE increase, but argues for some flexibility. “Congress is just picking a number,” he says. “If you pick the number, at least give us an off ramp.”

The following day, the Senate Commerce committee approves a bill requiring auto makers to improve fuel efficiency by 4% annually beginning in 2011 and average 35 mpg (132.4 L/100 km) by 2020. Following 2020, 4% gains would be expected annually without a set timeframe.

The bill might make it to the Senate floor in June.

Campbell urges the auto industry not to play defense on CAFE. He also says the industry cannot keep saying, “No,” to government solutions. Instead, auto makers and dealers need to get in the game and start offering alternatives.

Campbell is sponsoring a bill he calls the Drive Act, which allows the government to approach reducing dependence on oil in ways that makes sense, but he says he needs the help of the auto industry.

“My objective here is to get an unified auto industry to offer an alternative other than increasing CAFE,” Campbell says.

cbanks@wardsauto.com