Executive of America's major automobile manufacturers in Detroit have a recurring nightmare.
As detailed yesterday by the chief economist of General Motors Corp., Henry L. Duncombe Jr., the nightmare could become reality in the form of naitonal economic depression if auto makers are forced by government to move too quickly in designing and selling cars with better fuel economy.
"The major uncertainly surrounding future gasoline consumption will be the potential losses of auto sales created by fuel economy standards," and not whether Detroit can come up with the technology required, Duncombe told government officials who soon must set fuel economy standards for cars to be manufactured in model years 1981 through 1984.
Duncombe warned Secretary of Transportation Brock Adams, Federal Energy Administrator John O'Leary and Deputy Environmental Protection Agency Administrator Barbara Blum that if the government moves ahead with tough gasoline economy requirements, the American consumer may just stop buying new cars.
Policymakers would be running "the risk of extraordinary cost to the economy" if high-cost technology or products end up unacceptable to consumers. Individuals may decide to retain their older autos, which are less fuel efficient than new models.
Under this scenario, everyone would be the loser, he said. Government planners would be looking at a fleet of autos that consume more gasoline and a depressed auto industry, which would affect the entire economy.
In terms of employment, a cutback in auto sales of a million units would mean the loss of some 70,000 jobs in the auto industry and almost 200,000 jobs in other industries directly connected with production and distribution of cars, according to Bureau of Laborstatistics data.
And, according to GM's Duncombe, the forecasting firm of Chase Econometrics has pointed to a possible decline in sales of 2 million units in the mid-1980s, if new cars do not provide "at acceptable prices, what customers expect or need or want for their personal transportation."
While emphasizing that GM obviously would benefit by forcing every car owner to buy a new model, Duncombe told Adams the government should understand "that a rapidly rising and high average fuel economy standard may well result in higher fuel consumption for the 100 million cars on the road than a more moderately paced and lower standard."
Specifically, he urged Adems to permit smaller miles-per-gallon increments in the early years of the 1980s, as auto makers strive to meet the average 27.5 mpg standard legislated to take effect in 1985.
The Energy Policy and Conservation Act of 1975 also requires manufacturers to achieve a 20 mpg level by 1980 and the issues Adams must decide concern standards for the interim 1980-1985 years.
Adams emphasized yesterday his own views that the 1985 goal "must be met."
Americans depend on imported petroleum for 50 per cent of their energy needs with no [WORD ILLEGIBLE] of dependency in the near future, he said. "For that reason and because decision time is short, this hearing is eipecially significant," he said at the outset.
He conceded that the 27.5 mpg is "admittedly a difficult challenge," representing a 100 per cent improvement over 1974. Between the 1974 and 1977 model years, according to EPA estimates, the sales-weighted average fuel economy of new car rope 34 per cent - from 13.9 mpg to 18.6 MPG.
While this shows "we are . . . moving in the right direction," autos are still the biggest consumers of oil and this situation must be changed, Adams continued. "We have no choice but to encourage the development, production and purchase of cars capable of maximum fuel economy."
Cars will get smaller and lighter "if we are to get improved fuel efficiency and exhaust emission standards at the same time," the DOT chief stated. And Blum, of the EPA, said it will be better for Americans to "give up some interlor space" in their cars when the alternative may be using up all oil resources and not being able to drive cars at all.
O'Leary said, "We've seen the beginning of the end" in terms of oil and gasoline production and that reducing oil consumption is "not a thing we desire . . . it's a thing we must do." Spokesmen for the four U.S. auto firms - GM, Ford Motor Co., Chrysler Corp. and American Motor Corp. - were unified yesterday in supporting the goal of less consumption but they all had warnings similar to those of GM's economist.
Another leading economist from Michigan, however, said he saw no reason to rely on Detroit to make the changes that are required.
Walter Adams, past president of Michigan State University, contended that the "public interest has not been protected" at least since World War II by an auto industry he described as an oligopoly - one controlled by a handful of sellers.
On technology, he argued, U.S. auto makers "have a record of innovative lethargy and unprogressive sluggishness. They have lagged, not led, in the battle to develop cleaner, safer and more fuel-efficient cars. They have chosen to react to change, rather than to initiate it . . ."
Economist Adams urged Secretary Adams to require the fuel-economy standards mandated by Congress as "emminently reasonable," nothing that many foreign manufacturers already have attained them. The investment needed to develop the technology exists in the Big Three firms, which had 1976 profits collectively of nearly $4.5 billion, he asserted.