Cloaked in Green, but Guzzling Gas

April 19, 2003
By DANNY HAKIM
www.nytimes.com

DETROIT, April 18 - As the Ford Motor Company scaled back
expectations this week for its first hybrid-powered vehicle
and backpedaled on a pledge to improve the fuel economy of
its sport utility vehicles, Toyota was introducing its
latest Prius, which will get about 55 miles a gallon and be
the first midsize vehicle with hybrid technology.

For environmentalists, the contrasting developments
reinforced the sense that only foreign carmakers care about
curbing America's swelling appetite for oil.

"The Japanese are where you go if you want good technology,
and Detroit is where you go if you don't," said Daniel
Becker, the top global warming expert at the Sierra Club.

But the picture is also more complicated - and bleak, from
the perspective of reducing oil consumption. Toyota, Honda
and Nissan are flooding the American market with S.U.V.'s
of all sizes; Toyota and Nissan are redoubling efforts to
take on the last largely unchallenged stronghold of
Detroit, the pickup truck. And sales of new- model S.U.V.'s
from Japan far outnumber gas-sipping hybrids, which
supplement the internal combustion engine with electric
power.

"They're getting all this great green press over the
Prius," said John DeCicco, a senior analyst with
Environmental Defense, "but their product strategy has
moved into trucks big time."

As Toyota was promoting the Prius this week at the press
preview of the New York International Auto Show, in another
corner, Nissan introduced the Pathfinder Armada, its first
full-size S.U.V., which is due later in the year. The
Armada is as heavy as the Chevrolet Suburban, equipped with
up to 14 cupholders and can tow four and a half tons.

With a new crop of vehicles named Sequoia, Titan, Tundra
and Armada - can Godzilla be far behind? - Toyota and
Nissan are making a statement that they will build light
trucks as big as Detroit. Honda is also increasing
production, but not of the largest pickuplike models.

The influx of competition is forcing United States
automakers to lower their own prices on sport utility
vehicles and pickups and improve their own vehicles to stay
competitive.

Since 1999, Toyota, Nissan and Honda have introduced 10 new
pickup trucks and S.U.V.'s, compared with 3 small hybrid
cars from Toyota and Honda; last year, the Japanese Big
Three sold about 471,000 of these 10 vehicles in the United
States, while Toyota and Honda sold about 35,000 hybrids,
according to Ward's AutoInfoBank.

And that does not count huge sales of existing S.U.V.'s
like the RX-300 from the Toyota Lexus division or the
Nissan Pathfinder, to name a few.

Mr. DeCicco said that Asian automakers generally performed
better, segment by segment, in the environmental ratings
that he compiles, but by no means across the board.

A recent report by Environmental Defense found that G.M.'s
automotive fleet produced the most climate-warming carbon
in the 1990's - a function of its rank as the largest
automaker. But Toyota's carbon emissions grew the fastest,
by 72 percent, compared with 33 percent for the market, a
function of a product mix that is approaching the
truck-heavy tilt of the Big Three.

"In addition to addressing environmental concerns, we have
to balance what customers want, and many of them want
S.U.V.'s," said Donald V. Esmond, group vice president and
general manager of the Toyota Division in the United
States. Toyota executives have said they plan to sell
300,000 hybrids a year worldwide by the middle of the
decade.

"As we introduce more and more hybrid vehicles, Toyota will
continue to develop new, efficient and environmentally
friendly internal combustion engines," Mr. Esmond added.

These market dynamics help explain the regulatory knot in
Washington. The current corporate average fuel economy
system requires each automaker's annual fleet of passenger
cars to average 27.5 miles a gallon. Light trucks, which
include sport utility vehicles, pickups and minivans, are
required to average 20.7 miles a gallon; the Bush
administration is raising that requirement to 22.2 miles a
gallon by the 2007 model year.

Detroit says the Japanese benefit from the current
fuel-economy rules because companies like Nissan have until
now built mostly smaller light trucks, so the average miles
per gallon for their fleets is above the required average,
giving them more flexibility to further increase their
advance into larger light trucks. Executives want the
regulations revamped to give them more flexibility to build
even more light trucks, and the Bush administration is
considering such a proposal. The administration has also
said it intends to improve overall fuel economy in the
years beyond 2007. Environmentalists worry that the upshot
will be little progress on reducing pollution or fuel
consumption.

Further complicating matters is Ford's loss of $5.5 billion
over the last nine quarters. DaimlerChrysler is trying to
restore Chrysler's profitability. While General Motors has
been profitable, its margins are dwarfed by Honda and
Toyota, and it has enormous pension and health care
obligations that sap its competitiveness while providing
benefits to hundreds of thousands of Americans.

Consumers favor bigger engines and vehicles than fuel
efficiency, "and clearly Asian manufacturers have been on
that trend line just like the domestics have," said
Christopher Preuss, a spokesman for G.M., whose overall
fuel economy performance is the best of the Big Three.

The company has committed itself to trying its hand at
hybrids, but Mr. Preuss said that thus far "hybrids are
inconsequential because their volumes do not approach a
significant amount."

But for many environmental groups, Toyota and Honda are at
least actively selling fuel-saving technologies, while any
dialogue with Detroit has been largely abandoned. The
Sierra Club, which sees G.M. and its Hummers as a hopeless
case because of the company's hard-line stance on fuel
regulations, was bullish on William Clay Ford Jr.

But trust in Mr. Ford, Ford's chairman and chief executive
for the last year and a half, is fading. This week, the
company backed away from its commitment to raise its S.U.V.
fuel economy 25 percent by 2005 and declined to specify a
new timetable. Development problems have also emerged in
Ford's first planned hybrid, a version of its Escape S.U.V.


When Ford made its much publicized pledge three years ago,
G.M. and Chrysler executives said they would outperform
Ford but pointedly did not specify a commitment of their
own. Mr. Preuss declined to comment on Ford's action, and
Stuart Schorr, a Chrysler spokesman, would not address it
directly. He said "we have a commitment to increase light
truck fuel economy and will continue along that path."

Environmental groups say the industry cannot be trusted to
regulate itself. Despite technological advances, the rise
of S.U.V.'s has pushed the fuel economy of the average new
American vehicle to its lowest point in two decades,
according to the most recent data from the Environmental
Protection Agency.

"The Japanese automakers have better fuel economy, but it's
unclear if they're going to increase the fuel economy of
their overall fleets without the government stepping in,"
said David Friedman, a senior analyst at the Union of
Concerned Scientists.

Mr. Becker of the Sierra Club said, "Japanese manufacturers
are going to force the Big Three to compete because they're
increasing their market share with better technology."

"I work on global warming," he added. "I can't lose
hope."

http://www.nytimes.com/2003/04/19/automobiles/19AUTO.html?ex=1051950717&ei=1&en=4fabbc1e3e8247fe