By Scott Malone
DETROIT (Reuters) - There's a simple way to get Americans to drive fuel-efficient cars, according to auto executives, but they are not going to like it -- sharply hike the gas tax.
While politically unpalatable, gasoline that costs at least $4 a gallon would have a far greater effect on American fuel usage than Washington's $25 billion loan program meant to spark investment in new technologies, executives told the Reuters Autos Summit in Detroit.
Consumer demand for fuel-efficient cars like Toyota Motor Corp's Prius and Ford Motor Co's Escape hybrid surged last summer as gasoline prices soared above $4 a gallon.
But with the pressure off -- the average U.S. retail gas price was $2.66 a gallon at the end of October, according to the benchmark Lundberg survey -- Americans are once again buying fuel-hungry sport utility vehicles and other large cars.
"The U.S. allows the price of gasoline to go back and forth across this line where the consumers don't care about fuel efficiency and where consumers do care about fuel efficiency," Mike Jackson, chief executive of AutoNation Inc, the No. 1 U.S. auto retailer, told the summit in Detroit on Wednesday.
Gradually raising gas taxes to the point where fuel costs $4 to $5 at the pump will do more to stimulate demand in next-generation vehicles like General Motors Co's forthcoming Chevy Volt plug-in hybrid than any other policy initiatives, including raising the national fuel efficiency standards know as CAFE, Jackson said.
Jerry York, a former GM board member and an adviser to billionaire investor Kirk Kerkorian, agreed.
"Unless gas is $3.50 or $4 a gallon, consumers are not going to want to buy those cars," York said on Monday.
'AFRAID TO TOUCH' GAS TAX
The obvious impediment to such a move is political.
Higher fuel prices in the midst of a fragile economic recovery would likely be extremely unpopular even with consumers who favor "green" issues and less dependence on foreign oil.
Consumer sentiment toward car companies may also be at a low that is rivaled only by their attitudes toward big oil companies, particularly after the federal government pumped more than $100 billion into GM, Chrysler and other auto industry players to prevent their collapse during the most brutal economic downturn the United States has faced since the Great Depression.
"In the United States, we're afraid to touch the fuel price," said Tim Leuliette, chief executive of privately held parts supplier Dura Automotive.
"We've got to continue to raise taxes in the United States so that, by the end of the next decade, gas is about $8 a gallon in today's terms," he told the summit on Tuesday.
"What you have to do is do it in a manner that is slow enough and predictable enough that vehicle selection and choices by people over the cycle can be made in a logical way," he said, a point also emphasized by Jackson of AutoNation. Continued...
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