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3 Wall St. Journal article excerpts: new trends for cars
Sep 26, 2005 (From the CalCars-News archive)
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1. small cars can be safe
2. fuel economy sells cars
3. car makers urge federal fuel economy policies

http://online.wsj.com/­article/­0,,SB112769680728951730,00.html

Crash Course
How U.S. Shifted Gears to Find Small Cars Can Be Safe, Too
Studies Discover Size, Quality Are as Important as Weight; Drafting Rules
for SUVs
Honda Sticks Up for Little Guy

By KAREN LUNDEGAARD
Staff Reporter of THE WALL STREET JOURNAL
September 26, 2005; Page A1
--Jeffrey Ball contributed to this article.
Write to Karen Lundegaard at karen.lundegaard@...

For decades, whenever the federal government leaned on auto makers to improve fuel efficiency, the industry had a ready response: Research showed that lighter, more fuel-efficient vehicles weren't as safe as their heavier, gas-guzzling cousins. Even shedding as little as 100 pounds could lead to a serious increase in traffic fatalities.

The result has been a virtual standstill in fuel-economy improvements for cars, trucks and sport-utility vehicles over the past 20 years.

Now a wave of new studies and technologies -- strong, light materials, better airbags and smarter designs -- are beginning to break the logjam. The upshot: A big shift in government thinking that is paving the way for regulators to revamp fuel-economy rules for SUVs and pickup trucks for the first time in three decades.

The shift could have big implications for the environment and for consumers, who were beginning to clamor for more fuel-efficient vehicles even before Hurricane Katrina pushed gasoline prices at the pump above $3 a gallon. But it could significantly complicate things for the already financially strapped auto industry.
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Spurring the change in government thinking is new research, including a study that argued that the quality of a car can play as much of a role in safety as its weight. To measure quality, the study used resale values, which tend to correlate with better design and more safety features. Honda Motor Co. also broke from the industry, commissioning studies that found reducing a vehicle's weight while maintaining its size actually saves lives.

"There's now a credible opposing view to what used to be the only view," says David L. Greene, a research fellow at Oak Ridge National Laboratory, a Department of Energy research lab. A paper he co-authored in March, looking at car-crash fatality rates from 1966 to 2002, found no statistically significant relationship between fuel economy and increased traffic fatalities. Mr. Greene says that previous research that did find a correlation studied only the immediate years after fuel-economy reform when weight drops were most significant. But studied over a longer period, that correlation disappears, he says.

For years, the accepted wisdom in the car industry held that, all things being equal, heavier vehicles are always safer when two vehicles crash. New studies highlight how other factors -- including a car's size, body design and advanced technology -- can do much to counteract the weight issue.

The newer studies also have homed in on the downside of weight: While a heavy vehicle protects its occupants in an accident, it inflicts more damage to those it hits. That means reducing the weight of the biggest vehicles could yield dividends in both fuel consumption and safety. <long snip>

http://online.wsj.com/­article/­0,,SB112768781734851548,00.html

Fuel Economy Has Returned As a Marketing Tool
By GINA CHON
Staff Reporter of THE WALL STREET JOURNAL
September 26, 2005; Page B4
Write to Gina Chon at gina.chon@...

As consumers brace for another round of gasoline-price increases after Hurricane Rita, car makers are rediscovering fuel economy as a marketing tool.

Last week, General Motors Corp. previewed a line of large SUVs due out next year and emphasized improvements in gas mileage as much as their vast interior space and sleek new designs. GM has also focused on fuel economy in its "Only GM" ad campaign, which since February has been running in newspapers, on network TV and other media. In the ads, GM touts the "20 that get 30," meaning 20 of its models get at least 30 miles per gallon, including the Chevy Cobalt and the Pontiac G6. [This GM advertisement highlights 20 models that get at least 30 miles per gallon, an example of car makers using fuel economy as a selling point for vehicles.]

"We wanted people to understand that we are the leader in this arena and we offer more fuel-efficient vehicles than any other car company," says Bob Kraut, marketing director for GM.

Not to be outdone, Ford Motor Co. last week announced plans to boost production of gas-electric hybrid vehicles. Hybrids use less gasoline than standard engines and are expected to become more popular as a result of rising gas prices. Ford, which is hoping to erode Japanese auto makers' dominance of the hybrid market, ran newspaper ads last month emphasizing its commitment to hybrid technology. It plans more such ads.

At DaimlerChrysler AG's Chrysler Group, recent television ads have highlighted engines with what Chrysler calls its "multi-displacement system," which deactivates cylinders in a V-8 engine when the car is cruising at highway speeds. Chrysler says the system can improve fuel economy by 20%. The MDS is standard in the Hemi V-8 engine on seven vehicles, including the Chrysler 300C and the Dodge Charger R/T.
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Rising gas prices are prompting more Americans to consider buying fuel-efficient vehicles. In a survey to be released tomorrow, market research firm GfK NOP found that 40% of Americans would immediately purchase a more fuel-efficient vehicle if the price of gas hits $3.50 a gallon, while 27% said the same if the price is at $3 a gallon. The survey is the result of interviews with 2,000 adults.
<snip>
On the other hand, Mitsubishi Motor Corp.'s Mitsubishi Motors North America Inc., is using high gas prices to offer an incentive to consumers: free fuel. On Friday Mitsubishi began offering a year's worth of free gasoline to buyers of certain 2005 models, including the Galant and Eclipse Coupe. Each customer will receive a prepaid debit card for $1,500 to $2,500, depending on which vehicle was purchased, to use at gas stations. The offer lasts until the end of October.

http://online.wsj.com/­article/­0,,SB112768888845251578,00.html STORMS IN THE GULF

Bush Is Asked to Aid Energy Change
Industry Seeks Federal Role That Enhances Development Of Alternative Fuel
Options
By GINA CHON
Staff Reporter of THE WALL STREET JOURNAL
September 26, 2005; Page A12
Write to Gina Chon at gina.chon@...

Rattled by recent spikes in gasoline prices, Ford Motor Co., Toyota Motor Corp. and other auto makers say they want the Bush administration to take more-aggressive action to reduce U.S. dependence on petroleum.

As Hurricane Rita bore down last week on U.S. Gulf Coast oil refineries, Ford Motor Chairman and Chief Executive William Clay Ford Jr. sent a letter to President Bush asking for an energy summit involving auto makers, suppliers, fuel providers, consumers and government officials to talk about what the auto industry can do to find solutions for alternative fuel resources and other issues. Mr. Ford said the recently signed $17 billion energy bill "is only the beginning."

Ford last week announced plans to increase production of gas-electric hybrid models to as many as 250,000 vehicles a year by the end of 2010. Ford also said it plans to produce more cars and trucks that run on ethanol, which is an alcohol-based fuel alternative, including versions of its best-selling model, the large F-150 pickup.

Separately, Jim Press, head of Toyota's U.S. operations, said in an interview last week that he plans to go to Washington next month to lobby lawmakers to make energy independence an issue they discuss in the election campaign of 2008.

"We recognize the responsibility we have to come up with a solution to this economic problem," Mr. Press says. "As an industry, we should leave our individual companies' bags outside the door to work together on this issue."

General Motors Corp.'s Washington spokesman, Chris Preuss, says GM welcomes calls by other auto makers for more action on energy independence. "We believe the U.S. needs to begin aggressive energy-policy moves away from petroleum toward hydrogen," Mr. Preuss says. "We should diversify our energy stocks away from foreign sources."

Mr. Ford's call for an energy summit is another sign that the recent run-up in oil prices, and the post-Hurricane Katrina price spike that sent gasoline prices above $3 a gallon, are forcing a rethinking of energy strategy, particularly at GM and Ford. The big Detroit car makers have long resisted proposals to increase government fuel-economy mandates for sport-utility vehicles, pickup trucks and other light trucks, arguing consumers wouldn't want lighter, smaller, less-powerful vehicles.

But now, consumer tastes appear to be shifting. Sales of the large SUVs that pumped up GM and Ford profits for the past decade have fallen off 12% during the first eight months of this year compared with the same period last year. The latest Index of Consumer Sentiment from the University of Michigan showed a sharp drop in consumer confidence at 89.1 in August, down from 96.5 in July. At the same time, demand for hybrid vehicles has soared.

The slump in SUV demand has forced auto makers to accelerate their efforts to develop fuel-saving alternatives to traditional gasoline engines.

Gas-electric hybrid vehicles still cost several thousand dollars more than similar conventional vehicles, and auto makers could look to Washington for bigger tax breaks to help consumers offset the price difference. Auto makers could seek government money to promote construction of fueling facilities that could handle various kinds of fuel such as ethanol, natural gas or hydrogen. In the past, they have preferred such inducements and have resisted any proposed government mandates that would require them to produce more fuel-efficient cars.

It is unclear how much support auto makers will get from the Bush administration or Congress, particularly at a time when the government is straining to cover the costs of rebuilding hurricane-battered communities in the South.

"The President and his advisers continually review the status of the nation's energy policy on an ongoing basis to ensure a secure, affordable and clean supply of energy to power our growing economy," a spokeswoman for the White House Council on Environmental Quality said last week. "We are also taking steps to ensure that there is no significant disruption in energy supply, either on a regional or national basis, including release of oil from the Strategic Petroleum Reserve, agreements with our IEA partners to temporarily increase imports of crude oil and refined products, and efforts to increase energy conservation in both the public and private sectors."
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