Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – While the auto industry currently is focused on the looming 35-mpg (6.7 L/100 km) fleet fuel-economy requirement coming in 2020, an American Honda Motor Co. Inc. official advises everyone to brace for even higher standards.

“I’m proud to say Honda supported the legislation and supported 35 mpg by 2020, but we need to stop thinking about this law being 35 mpg by 2020,” John German, manager-environmental and energy analysis, says at the Management Briefing Seminars here.

“What the law really said is ‘maximum feasible through 2030,’ and (the National Highway Traffic Safety Admin.) is on a path already to go way beyond 35 (mpg) by 2020. That’s just going to be the minimum.”

German predicts in his speech a 50-mpg (4.7 L/100 km) fleet fuel-economy requirement will be on the books by 2030, but later tells media members 45 mpg (5.2 L/100 km) is what all auto makers should be planning for.

With these looming regulations, automotive innovation will increase greatly, he predicts. But so will vehicle prices, and not all consumers will consider the gain in fuel efficiency worth the extra cost.

“Customers tend to be very risk averse,” not just in the auto industry but across the board, German says.

They face “tremendous uncertainties” when evaluating fuel costs, such as where they will live in the future, the distances they’ll drive daily and what the price of gasoline will be, he says.

“What I’d like to suggest is, the reason people have been flocking for performance, comfort, utility and safety features instead of fuel economy is not because they value them more highly, but because the benefits are more certain,” German says.

“They know what power windows do.”

While buyers are cringing over $4-per-gallon gasoline, German says when adjusted using the Consumer Price Index, the cost of driving per mile is about $0.18.

“This is not a historic high, it was higher during the first oil crisis,” he says. “And in fact, it’s only $0.04 per mile higher than it was in the good ole days”