The government, in a move benefiting General Motors Corp. and Ford Motor Co., yesterday proposed holding federal fuel-economy standards at or near current levels over the next two years.
The proposal by the National Highway Traffic Safety Administration would give GM and Ford the time they say they need to meet a 27.5-miles-per gallon standard, originally scheduled to have taken effect last year.
The NHTSA last September granted a one-year reduction of the 27.5-mpg requirement, lowering it to 26 mpg for 1986-model passenger cars.
But GM and Ford, the nation's two biggest auto makers, argued that the one-year rollback was not enough to keep them in compliance with the 1975 Energy Policy and Conservation Act.
The law, passed in response to the Arab oil embargoes of the early '70s, establishes annual corporate average fuel economy (CAFE) standards. Those standards set average fuel-economy requirements for new-car fleets sold in the United States.
An auto maker failing to meet CAFE requirements is subject to a $5-per-car fine for each car in its new-car fleet for each tenth of a mile per gallon the fleet falls below the standard.
Critics of the proposed CAFE rollback yesterday said that, under the penalty rule, GM and Ford could be liable for a total of $500 million in fines over the next two years if the government refused to extend the rollback.
"Simply put, it's a decision to bail out GM and Ford at the expense of the consumer and at the expense of Chrysler," said a Chrysler Corp. spokesman, whose company has opposed relaxation of the original 1985 standard. "This simply allows GM and Ford to get out of $500 million in fines" at a time when the government says it needs to reduce deficits, he said.
Chrysler is the nation's third-largest auto maker. Its product line mostly consists of small and mid-size cars, most of which are vulnerable to competitive products from Japan, but easily meet the CAFE standards. GM and Ford, by comparison, are "full-line" producers whose large cars are big sellers and moneymakers -- giving the two giants an advantage in the important battle for market share.
Chrysler officials charged the government with abetting the GM-Ford advantage by not forcing them to meet the 27.5-mpg standard.
The NHTSA yesterday, in proposing that the standards for 1987 and 1988 be held "somewhere between 26 and 27.5 miles per gallon for each model year," disagreed.
GM and Ford have made "significant progress" toward the 27.5-mpg standard, NHTSA said. But "unforeseen events," such as a drop in gasoline prices, led to increased demand for large cars and created market conditions "that prevented" the firms "from fully implementing . . . plans" that would have put them in compliance with the law, the NHTSA said. The agency will seek comments on the proposal before issuing a final rule. The area depth is 4.647 inches,