Car execs: Gas tax break won’t help

DETROIT FREE PRESS

Automotive industry leaders have begun to speak out — quite boldly — against a proposal, being promoted by Sens. John McCain and Hillary Clinton, to suspend the 18.4 cents a gallon federal excise tax on gasoline.

The U.S. presidential hopefuls say it will ease the financial pain for Americans paying nearly $4 a gallon for regular gas, on top of an economy ravaged by a housing and credit crisis, and mounting food prices.

But Chrysler LLC CEO Bob Nardelli, AutoNation CEO Mike Jackson and others say that the nation needs the high gas prices to encourage consumers to buy more fuel-efficient vehicles — which the federal government has mandated automakers build — as well as make other decisions that are responsible for the world at large.

“You have to have alignment,” said Jim Press, the former Toyota Motor Corp. executive who now serves as a Chrysler president and vice chairman, during a meeting Thursday between the Detroit Free Press and Chrysler’s top leaders.

On Wednesday, Jackson, the nation’s largest dealer with 321 dealerships and a longtime critic of the nation’s deficient energy policy, told the Free Press that suspending the gas tax demonstrated “zero intellectual honesty” and gave Americans “confusing signals” about energy consumption.

“I’ve never heard of a plan that says, ‘I want you to use less of something but I’m going to reduce the price,’ ” said Jackson, who has publicly supported an even higher gas tax to encourage behavior that is more responsible.

“America has an addiction to cheap oil,” he said. “It’s like telling a heroin addict: ‘You’ve got to deal with this heroin thing, but don’t worry. I’m going to do everything I can to reduce the price of heroin. But you really should do something about it.’ ”

Nardelli told the Free Press today that while he empathized with the pain higher gas prices cause for consumers, he said the nation has to have an energy policy that is aligned with the country’s larger goals.

“Rather than a disincentive,” which he believed lower gas prices would be to consumers, Nardelli even suggested a federal incentive for consumers who buy fuel-efficient vehicles that are built in the United States. A move like that, he added, might also help boost the slowing U.S. economy.

Spokesman for General Motors Corp. and Ford Motor Co. could not immediately be reached for their position on the proposed summer tax break. But last summer, Ford CEO Alan Mulally has expressed an interest in a higher gas tax to encourage more fuel-efficient behavior.

Mulally came short of directly endorsing a boost, but said, “I think it’s so important that we all join in this debate and we really decide what we all want to do about energy security and global warming. ... A piece of that could be a tax.”

Although lower gas prices might encourage consumers to move from smaller cars back toward larger SUVs and pickups that give automakers and dealers bigger profits, automotive leaders generally seem tired of having their sales whipsawed by consumer behavior that bounces up and down with the latest gas prices.

A gas price spike after Hurricane Katrina in mid-2005 caused a drastic consumer shift away from SUVs and trucks, which had made up 56 percent of industry sales, to more fuel-efficient cars. That ongoing shift is one of the main reasons Detroit’s automakers have been financially suffering since then and have had to close plants and lay off more than 60,000 workers.

So far this year, truck sales have declined to less than 52 percent, with cars gaining in popularity. Small-car sales were up 3.4 percent through March, even as overall industry sales fell 8 percent. And the smallest subcompact cars, which generally offer fuel economy of more than 30 piles per gallon, were up a noteworthy 32 percent.

That broad consumer shift is the “silver lining” in the recent gas pains, Jackson said, and has helped convince the auto industry it could meet new fuel economy rules.

A new proposal from federal regulators demands that automakers meet a new fuel economy standard of 31.6 miles per gallon for cars and trucks by 2015.

In the past, automakers resisted ambitious fuel-economy rules, saying they were out of touch with consumer demand for hulking SUVs and trucks. But lately, with high gas prices, consumer demand finally has been aligned with the nation’s fuel-economy goals.

And the proposal from McCain and Clinton threatens to throw that alignment off course.

“It’s intellectually dishonest,” Jackson said. “Let’s just be honest with the American people that it’s in our long term best interest to have higher gasoline prices.”

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