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August 26, 2019 11:18 AM

California deal ‘foolish,' Trump tells auto makers

Vince Bond Jr.
Automotive News
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    President Trump may believe he's doing the auto industry a favor by trying to freeze fuel economy standards, but few executives seem to be interested in the help.

    The unusual standoff landed Ford Motor Co. and General Motors in front of Trump's bully pulpit as he said that refusal to go along with his plan would reduce safety and raise costs, which Ford disputed. Trump also said vehicles wouldn't run as well, an assertion not supported by any evidence.

    He blasted auto makers for a voluntary agreement signed in July with California that would set fuel economy standards for the state that are more stringent than the federal government's proposal, which would lock in fuel consumption rules at the 2020 level of 37 mpg through 2026.

    The Alliance of Automobile Manufacturers favors incremental increases each year, saying its members want to increase gas mileage to meet consumers' expectations. The group represents auto makers that build 70 percent of all cars and light trucks sold in the U.S., including BMW Group, Fiat Chrysler Automobiles, Ford, GM, Mazda, Mercedes-Benz, Toyota and Volkswagen.

    Related Article
    California pressures auto makers to join CAFE deal

    "Just like towing capability or power or headroom, legroom—you name it—this is another attribute where manufacturers compete," Christopher Nevers, vice president of energy and environment for the alliance, told Automotive News. "So it's only natural that a manufacturer is seeking to do more there.

    "I really think some of it is the social responsibility aspect."

    Although BMW, Ford, American Honda and Volkswagen all signed the California agreement, Trump singled out Ford from that group in a series of tweets last week. He also dragged GM into the fray, even though it wasn't part of the deal.

    Trump called auto executives "foolish" for being "willing to spend more money on a car that is not as safe or good, and cost $3,000 more to consumers."

    His tweets repeated the administration's belief that lighter, more fuel-efficient cars are less safe and more expensive. Trump said the companies were going along with California to be "politically correct" and that the state would "squeeze them to a point of business ruin."

    Ford disagreed. It didn't respond directly to all of Trump's claims but said it has consistently supported a 50-state solution for fuel economy standards and that the California arrangement would provide "regulatory stability while reducing CO2 more than complying with two different standards."

    The company said it "will continue to produce ever cleaner, smarter and safer vehicles."

    GM, meanwhile, said it's focused on "working with all parties" on a deal that would include a 50-state solution and a national electric vehicle program. "The pathway includes continuously improving fuel economy and our commitment to an all-electric future," GM said in a statement.

    A Honda spokeswoman said the agreement "will provide regulatory stability to the signatory auto makers and will secure more CO2 reductions than if two separate standards were implemented."

    Honda said in July that the proposed regulatory framework with California results in a simple, national greenhouse gas program and "avoids the patchwork of overlapping federal and state regulations that exists now."

    Cox Automotive said auto makers recognize that California, the nation's largest vehicle market, and the states that follow its lead are key to sales. California accounts for about 13 percent of all U.S. new-vehicle sales, according to Cox.

    That state and those that have adopted its emissions standards represent about 38 percent of the market, "numbers auto makers can't ignore," Cox Automotive said in a statement.

    The Detroit auto makers' relationships with Trump have been on a seesaw for years. Trump is often quick to praise the companies for job-creating assembly plant investments that strengthen the U.S. work force. That goodwill can turn in an instant when news emerges of plant shutdowns and layoffs. Trump also has criticized the globalization of the industry, which he says has cost American jobs.

    Nevers said he wouldn't rule out the possibility of a compromise between the auto makers and government just yet, saying "hope springs eternal.

    "What you hear out there with the California and four-auto maker agreement is somewhere between the preferred pathway that was proposed by the Trump administration and that which the Obama administration had initially finalized," Nevers said.

    "I think there's still a chance that we could all come together and settle somewhere that makes everybody happy."

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