Which Carmakers Will Win—and Lose—Under New Mileage Rules

As the government clarifies mpg standards, some automakers face a steep "mileage gap."

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Drivers aren't the only ones desperate to get more mileage from a gallon of gas.

Under the landmark energy bill that Congress passed last year, automakers must meet tough new mileage targets. The rules will be finalized later this year and go into effect starting in 2011. And based on new data, it looks as if a few automakers will struggle to meet the targets—or miss them altogether, which would trigger expensive fines.

The automakers aren't publicizing their mileage shortcomings, but U.S. News found the data in recently published government documents. Under the new law, cars sold in the United States need to average 35 miles per gallon by 2020—a 40 percent increase over today's standards. But Congress left lots of devilish details for others to figure out, and the repercussions of the mileage changes are just starting to emerge.

Each automaker, for instance, will have a different mileage target, based on the mix of cars, SUVs, and pickup trucks it sells. It's up to the National Highway Traffic Safety Administration to determine each automaker's target, along with a phase-in schedule. NHTSA just recently published its first draft of those targets, including internal company data that show each automaker's estimates of its own fleetwide mpg in 2011.

U.S. News used those data to determine which automakers are closest to their required targets for 2011 and which have the farthest to go. (You can view our sources and methodology here.) The findings reveal that companies like Volkswagen, Subaru, and Suzuki may have to significantly shift their product plans—and do it fast, since building cars is a complex process, with design and manufacturing plans often locked down two or three years ahead of time. Other manufacturers could gain an advantage from the new rules. Here's what our analysis shows:

Some surprising laggards. Volkswagen, Subaru, and Suzuki are far from their 2011 targets—even though they tend to build smaller cars with better mileage than their competitors. This seems to be an anomaly of the new rules. Each automaker's target is computed based on the "footprint," or relative size, of each model it sells, along with the sales volume for each model. Automakers with a bigger average footprint, therefore, tend to have lower mileage targets.

Manufacturer Company's planned
average mpg, 2011
Newly required
average mpg, 2011
How much mpg
must be improved
Porsche 25.4 37.6 48.0%
Subaru 27.6 36.9 33.7%
Suzuki 29.6 37.3 26.0%
Volkswagen 28.8 35.4 22.9%
BMW 27.5 33.3 21.1%
Mercedes 26.2 31.7 21.0%
Mitsubishi 29.8 33.0 10.7%
Ford 28.2 31.0 9.9%
GM 28.2 30.0 6.4%
Average 30.1 31.2 3.7%
Hyundai 32.7 33.4 2.1%
Nissan 30.6 31.2 2.0%
Chrysler 28.2 28.7 1.8%
Honda 34.8 32.1 -7.8%
Toyota 34.3 30.1 -12.2%

Sources: National Highway Traffic Safety Administration, "Notice of Proposed Rulemaking, Average Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years 2011-2015;" "Preliminary Regulatory Impact Analysis, Corporate Average Fuel Economy for MY 2011-2015 Passenger Cars and Light Trucks."

Notes: Manufacturer production plans are preliminary in some cases and are based on "adjusted baseline" numbers, as computed by NHTSA, which account for certain manufacturers making minor technological changes to meet government requirements.

The footprint provision was intended to be a kind of grandfather clause that would protect automakers with larger fleets—which happen to be General Motors, Ford, and Chrysler—from rule changes that would create abrupt disadvantages. But there seem to be unintended consequences. Volkswagen, for instance, expects its passenger cars to average about 29 miles per gallon in 2011, slightly better than those of the Detroit automakers. But because its cars are generally small, its required mileage is 35.4 mpg—near the top of the scale. That means Volkswagen has to improve the fuel efficiency of its planned fleet—already deep into development—by 23 percent to meet the new standard.

That's a tall order. "For anybody within 10 percent or less, it shouldn't be that big a deal," says David Cole, chairman of the Center for Automotive Research. The carmakers ought to be able to substitute smaller engines, more efficient transmissions, and lighter materials to help reach the required mpg numbers. "But over 20 percent," says Cole, "it's going to be tough."

Volkswagen and Subaru say they're working on diesels, electric cars, and other high-mileage solutions to the problem. But both companies are also likely to lobby for a change to the rules, which aren't final yet. "It seems inherently unfair," says Subaru spokesman Michael McHugh. "We've been building small cars for a long time, and it feels like we're being punished."

The Detroit Three fare OK. Executives from the domestic automakers have complained that the new targets will require costly new technology—but they're closer to their targets than some competitors. For both passenger cars and light trucks (which the government treats as two separate categories), GM, Ford, and Chrysler are all within 10 percent of their targets. In fact, for light trucks—which include SUVs and pickups—GM is in pole position. Even though GM's average mileage for light trucks will be a relatively low 22.9 mpg in 2011—in the bottom half—it will need to improve its numbers by just 4.4 percent to meet its target.

The domestic makers will also benefit from credits for building "flex fuel" vehicles that can run on ethanol, which will effectively lower the mileage targets they have to meet. Many automakers will probably offer flex-fuel vehicles by 2011, but the Detroit Three will still build the most.

Manufacturer Company's planned
average mpg, 2011
Newly required
average mpg, 2011
How much mpg
must be improved
Porsche 17.3 25.9 49.7%
Mercedes 19.1 28.4 48.7%
Volkswagen 20.1 26.2 30.3%
Suzuki 23.4 30.3 29.5%
BMW 22.4 28.2 25.9%
Mitsubishi 25.5 29.4 15.3%
Hyundai 25.2 27.5 9.1%
Subaru 27.5 30.0 9.1%
Chrysler 23.6 25.2 6.8%
Toyota 23.4 24.9 6.4%
Average 23.5 25.0 6.4%
Nissan 23.7 24.9 5.1%
Ford 23.6 24.7 4.7%
Honda 25.0 26.1 4.4%
GM 22.9 23.9 4.4%

Sources: National Highway Traffic Safety Administration, "Notice of Proposed Rulemaking, Average Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years 2011-2015;" "Preliminary Regulatory Impact Analysis, Corporate Average Fuel Economy for MY 2011-2015 Passenger Cars and Light Trucks."

Notes: Manufacturer production plans are preliminary in some cases and are based on "adjusted baseline" numbers, as computed by NHTSA, which account for certain manufacturers making minor technological changes to meet government requirements.

Luxury makes might miss the mark. Porsche, Mercedes, and BMW all face sizable gaps between their expected mileage numbers and the new requirements. They might improve fuel economy some, but their customers tend to be more interested in performance than mileage—and willing to pay for it. On many luxury cars, buyers already pay a $1,500 "gas guzzler" tax for big, thirsty engines. And for the luxury automakers, paying the fines might be preferable to changing their cars—or inventing technology that provides top performance and high mileage both.

And the winners are... Guess who? Toyota and Honda are the only manufacturers whose own plans appear to be more aggressive than the new government requirements. Toyota, for instance, expects its passenger car fleet to average 34.3 miles per gallon in 2011. That's 12.2 percent higher than its target—which is one of the most demanding to start with. Honda is 7.8 percent ahead of its passenger-car target and tied with GM for the best spot on light trucks. The two Japanese automakers benefit from popular hybrids and a stable of efficient cars, many of which originated in Japan—where mileage standards are even tougher.

TAGS:
cars
energy policy and climate change
National Highway Traffic Safety Administration
fuel efficiency
car manufacturers
  • Rick Newman

    Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at rnewman@usnews.com.