In a "Nixon goes to China" Moment, Detroit Embracing Fuel Efficiency

Last week’s release of the official regulatory proposal for stronger standards provoked a “Nixon goes to China” moment for Detroit car companies. After decades of fighting fuel-efficiency standards and denying consumers want more MPG, GM and Ford both embraced the brave new world of fuel-efficiency. In doing so, they took important steps to remaking themselves into fuel economy leaders.

GM’s Akerson says 54.5 mpg is a “win for American manufacturers”

Just six months ago, recently retired GM executive Bob Lutz was quoted as calling 42 mpg “totally ridiculous”?

But last week in a speech to the Detroit Economic Forum, Chairman and CEO Dan Akerson praised the Obama administration's 54.5 mpg proposal as a “win for American manufacturers”. According to the Detroit News:

Akerson said the uncertainty about future requirements had been "one of the major risks coming into 2011." Under the deal, automakers won't face separate regulations from California and other states

Ford’s Farley admits consumers want more MPG

It’s not every day when an automaker admits that the majority of customers are dissatisfied with their products. But that’s exactly what Jim Farley, Ford's global marketing chief, said last week at the Barclays Capital 2011 Global Automotive Conference:

"There are 240 million people driving vehicles in America and only 32 percent have a good opinion of Ford on fuel economy…That means 68 percent don't."

Mr. Farley laid to rest any doubt that his company is missing the boat on meeting consumer demand for fuel efficiency:

"Fuel economy is ground zero in pricing power in the U.S. for Ford," Farley said. "If you can change perceptions on fuel economy, you can change pricing power across your whole lineup."

"But we have a long way to go," Farley said. "Those that own fuel economy in the U.S. own pricing."

National Auto Dealers Association isolated in their opposition

As if to prove the old saying “you can’t satisfy everybody all the time”, the nay-saying NADA said,

This policy is contrary to what most consumers are actually buying today, despite the wide availability of more fuel efficient models.

But this statement is not only contrary to Ford’s statement, overwhelming evidence in the market place, and in their own words on their own website:

New or used, fuel-efficient cars are hot. The clamor for hybrids is rising as fast as gas prices, and even some older-model hybrids are gaining new interest — the MY isn’t nearly as important as the mpg. High-mpg cars sell themselves. Hybrids and four-cylinder models are flying out the door.

Of course not all auto dealers agree with their lobbying association. In a recent op-ed in Automotive News, car dealers Chuck Frank and Adam Lee state:

We don't understand our fellow dealers who oppose the new mileage goals. Why would you oppose fuel economy standards that are good for your customers, good for the country and good for business?... Some NADA members might automatically oppose government regulation of any kind. Others might worry that higher mileage standards will hurt their business, despite historic evidence to the contrary. But putting your fears ahead of your customers' needs is not a great business strategy. There is no conflict between the higher mileage that customers want and the desire of dealers to sell more cars and increase their profits.

With overwhelming support including automakers, the UAW, and consumers, it’s time for NADA to have its own “Nixon goes to China moment” and support the new standards.