A Secret Cheer for Gas Prices

By Warren Brown
Sunday, May 18, 2008

Largely thanks to government mandates and rising fuel prices, the green revolution is revving up in the global automobile industry.

Even Nissan, which once frowned on all things electric and hybrid, is planning to launch several fleets of electric vehicles aimed at markets such as New York and London and at commercial delivery enterprises worldwide.

General Motors, Ford and Chrysler also are moving toward vehicle fleet mixes that will include many hybrid and electric cars and trucks, as well as vehicles equipped with advanced gasoline and diesel engines.

Although few automobile executives will say so publicly, most of them, especially in the United States, are praying that gasoline prices remain high to help protect their multibillion-dollar investments in new vehicle propulsion technologies. That is because government-mandated investments to improve automobile fuel efficiency and emissions controls in the United States historically have been accompanied by ineffective government action to get consumers to buy the results.

By comparison, in Europe and Asia, government demands for tougher controls on carbon dioxide emissions and for vehicles that have better fuel efficiency often have been wedded to levies designed to affect consumer behavior, including higher taxes on gasoline and horsepower.

"But we aren't going to do that here," said Greg Martin, Washington spokesman for GM.

"Would GM want Congress to do that, raise federal fuel taxes?" I asked.

"We have no position on the gas tax question," Martin said, giving an answer often repeated by domestic automobile executives.

But many of them secretly are applauding the rise in gasoline prices, although, ironically, fuel inflation now is costing their companies hundreds of millions of dollars in lost sales of gas-thirsty pickup trucks and sport-utility vehicles.

Car companies see the demise in popularity of those vehicles as a short-term problem, perhaps even one that was inevitable. Interviews with executives at Chrysler, Ford, GM and Mazda reveal as much. For example, G. Richard Wagoner Jr., in public and private comments, frequently has predicted that challenges to the continued availability of oil and the rising price of fuel would change consumer vehicle demand and the kinds of cars and trucks produced by the automobile industry.

That does not mean big cars and trucks will disappear, Wagoner said. "But they will become more efficient," he said. "We will have more electrics."

Carlos Ghosn, chairman of the Nissan/Renault enterprise, this month told reporters in Cascais, Portugal, that he changed his position on hybrids and electrics because the mind-set of the global automotive market has changed.

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