GM Fears CO2 Regs; Delays RWDers

General Motors Corp. is delaying decisions on many new vehicle programs because of uncertainties involving future emission and fuel economy regulations, Bob Lutz, GM Vice Chairman and director of all global product development, told a group of reporters.

Lutz revealed the freeze, which puts a hold on a full-sized rear wheel drive Cadillac planned for the end of the decade, as well as a plan for a series of small rear-drive cars, to reporters in New York last week.

The 2009 Chevrolet Camaro is one product said to be on the safe list.

The delays go beyond full vehicle programs and also include such key components such as engines. The product executive said he believes such delays are being ordered by other auto companies that operate in the American market. From his comments it would appear that the delays amount to an almost-general freeze. Lutz didn't say how long this could continue without serious damage to GM's competitive position.

Mr. Lutz said the problems come from the recent Supreme Court decision that allows and encourages the Environmental Protection Agency (EPA) to set standards for limiting carbon dioxide (CO2) emissions. CO2 is an emission from internal combustion engines and can be limited by increasing fuel economy, for example.

The company also sees demands for large increases in fuel economy growing, with demands for four-percent increases a year or up to even 40 miles per gallon. While fuel economy boosters have been talking this way for years, Mr. Lutz said the company believes they are gaining power and could even be able to put their demands into legislation. And if it couldn't get by President Bush, it could well get by the next President, he suggested.

Present fuel economy regulations call for a fleet average of 27.5 miles per gallon for cars — less for trucks — and even that may be reduced by credits given, for example, for equipping auto engines so they can use ethanol.

The "cheap" ways to achieve fuel economy are used up, Lutz said, and it will be expensive, $5000 to $6000 a vehicle, he said, to try and approach the higher numbers being mentioned.

General Motors "is very reluctant now to kick off stuff" that would make it more difficult to achieve higher fuel standards, Mr. Lutz said. He also said that GM really doesn't think pushing for more miles per gallon is the best way to go. That's because as fuel economy goes up, people drive more, using more fuel. Much better, he said, would be a revolution, using ethanol, or E85 which is 85 percent ethanol, as fuel or even battery-powered electric vehicles.

He also said that GM doesn't expect to return to 30 percent of the American market, but looks for growth outside the U.S. He said he thought GM could be profitable at 25 percent of the U.S. market with some cost improvements. At present GM has 22-23 percent of this market.

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