Washington Imposes New Strategy On Detroit

As a rule of thumb, an industry is better off policing itself than waiting for Congress to step in and do it for them. But in a post-"Inconvenient Truth" America with gas prices at record highs, American automakers are paying a bit of penance for decades of trading fuel efficiency for larger vehicles. Not even heavy lobbying could hold off the new fuel standards set in the energy bill that passed a few days ago.

By 2020, vehicles must average 35 miles per gallon. The Wall Street Journal takes a look at the implications behind a mandate to quickly move to fuel-saving technologies. Large vehicles won't be gone forever, though, since automakers will have some "regulatory maneuvering room" in the form of federal subsidies to offset retooling factories and fleets. But there's no doubt MacVehicles are going to be less practical to manufacture.

"As manufacturers go about their product plans, the thinking will be 'all mileage, all the time,' says an official with one major auto maker. Emphasis on 0 to 60 performance, big engines and large horsepower numbers will decrease. The balance will tilt toward improving mileage, this person said. Powerful sports cars like Ford's popular Mustang could become endangered, economic-forecasting firm Global Insight says, though exactly how auto makers will recalibrate their product mix remained unclear."

How much wiggle room will Detroit get? An article at The Freep implies the Mustang very well may be endangered, but certain loopholes will still exist.

"The deal also gives automakers some room to maneuver. Not all of them will have to meet the 35-m.p.g. industry-wide goal, and Detroit companies might have a lower number. Regulators will count cars and trucks separately, preserving to some degree the so-called SUV loophole that has helped Detroit over the past few years.

The rules also would allow automakers credits for renewable fuels and a new ability to trade gains in one class of vehicle for shortfalls in the other."

Bonus reading:

-- FuelEconomy.gov, a website with info on hybrids and flex-fuel vehicles, as well as tax incentives consumers can get.

-- EPA.gov, learn how the EPA sets fuel economy estimates for vehicles and read the 2008 Fuel Economy Guide.