Obama Will Decide New Auto Fuel Efficiency Targets
Date: 08-Jan-09
Country: US
Author: John Crawley
President-elect Barack Obama speaks to the media following a meeting with members of his future cabinet and his economic advisors at his transition office in Washington January 6, 2009
Photo: Jason Reed
WASHINGTON - The Bush administration will not finalize new auto fuel efficiency standards, as it had planned, due to the industry's woeful financial state, officials said on Wednesday.
The Transportation Department had intended to complete the regulation laying out annual mileage targets from 2011-15 by year's end, but will now hand the matter over to the incoming Obama administration.
The rule must be finalized by April to allow automakers time to incorporate tougher mileage standards in their product plans.
The administration approved a $17.4 billion bailout of General Motors Corp (GM.N) and Chrysler LLC in December to avert the threatened near term collapse of one or both of them.
Ford Motor Co (F.N) did not seek a bailout, but also is struggling financially.
Foreign and domestic automakers have experienced sharp sales declines and other problems as the global credit crunch and recession have choked off consumer and corporate borrowing. Most consumers finance their vehicle purchases.
The government has proposed a 25 percent increase in fleet fuel efficiency for the four-year period ending 2015, which would cover two-thirds of the congressionally mandated target of 35 miles per gallon by 2020.
The government estimates the changes will cost car companies in excess of $100 billion by the end of the next decade -- most of it borne by GM, Ford and Chrysler, which is controlled Cerberus Capital Management CBS.UL.
(Editing by Andre Grenon)
