Cerberus (the private equity group that just bought Chrysler from Daimler) has been desperately lobbying lawmakers to reconsider Congressional Democrats’ plans to force a 35 mpg fuel mileage mandate on automakers – a new roadblock in the path of Chrysler’s recovery plans.
Their concern is not hard to understand. The Reid/Pelosi jihad to reduce vehicles’ carbon footprint seems deliberately targeted at destroying U.S. automakers. The Wall Street Journal editorial page provides this excellent analysis today of the politics.
Now consider the numbers. . .
Light truck (SUV) sales account for 70 percent of Chrysler sales while they only make up 40 percent of Honda sales, for example. Trucks today average 22 mpg fuel economy while cars average about 27. Honda currently makes only one vehicle that gets 35 mpg (the small Honda Civic Hybrid) while Chrysler makes none.
So getting its entire car/truck fleet to average 35 mpg by 2020 could cripple Chrysler earnings as it would have to eliminate large chunks of its most profitable segment.
“We estimate the Big Three could meet the 35 mpg standard only by dramatically reducing sales of large SUVs and pickups by 60 percent, while improving car fuel economy by about 34 percent and truck fuel economy by 25 percent,” writes Brian Johnson, an auto analyst with Lehman Brothers.
This year, 34 percent of GM sales have been in the big truck category (like the Chevy Suburban Sen. Reid drives). At Ford, it’s 31 percent and Chrysler it’s 20 percent. By contrast, large SUV sales have accounted for just 10.5 percent of Nissan sales in 2007 and 8 percent of Toyota sales.
And when it comes to powerplants, 60 percent of Honda and Toyota production is fuel-efficient four-cylinder engines, compared to only 14 percent of Chrysler and Ford engine production – and just 21 percent of GM’s.
Radicalized by their party’s Green base, Democratic plans for the auto industry are nothing short of reckless.