GM says new fuel requirements to add $6,000 per car

DETROIT (Reuters) - New fuel efficiency requirements imposed by Congress will add, on average, $6,000 to the price of GM vehicles sold in the United States, the automaker’s vice chairman and product chief said on Tuesday.

General Motors Vice President of Global Design Ed Welburn (L) and General Manager Jim Taylor (C) listen as Vice Chairman Bob Lutz invites the audience on to the stage for a closer look at the vehicles during press days of the 2008 North American International Auto Show in Detroit, Michigan, January 14, 2008. REUTERS/Rebecca Cook

Congress passed a new energy law in December 2007 that requires automakers to increase fuel economy across the industry to 35 miles per gallon by 2020 -- up 40 percent from current levels.

“We’ve done the research and it’s going to cost us $4,000 on some vehicles and $10,000 on others, with an average of about $6,000,” Bob Lutz told reporters at the North American International Auto Show.

“That cost will have to be passed on to consumers,” Lutz, a long-time vocal critic of federal fuel regulations, said.

Lutz said the law -- the first mandated increase for passenger car fuel economy in more than two decades -- will force GM to make vehicles lighter.

“We can make the 35 miles per gallon with vehicle size structures more or less like they are today but we will have to restrict our choices when we decide what we want to make next,” Lutz said.

Lutz said one example of the restriction in choices is that GM is now reversing its decision to make rear-wheel-drive versions of some vehicles because those models use more fuel.

“We probably have to take a lot of weight out of the vehicles. We will have to use some premium materials like more aluminum, more magnesium,” Lutz said. “Which gets you the weight savings but drives the cost up.”

“But we are going to try as much as possible to preserve the size of the vehicle the American public wants to buy.”


Lutz also said GM is looking at entering the premium small car segment in another effort to gain more fleet-wide fuel efficiency.

“We are looking at it,” Lutz said. “Making smaller cars that cost more will be part of the process to get to the 35 miles per gallon.”

GM’s North American sales Chief, Mark LaNeve, earlier Tuesday told Reuters the automaker is seriously considering developing a car for that segment, which would likely be branded a Saab, Hummer or Cadillac.

The luxury subcompact is a category most automakers in the United States have stayed away from so far.

BMW BMWG.DE, the world's largest premium carmaker, is the only automaker to succeed with a small luxury car in the U.S. market -- its Mini Cooper.

Volkswagen's VOWG.DE premium brand, Audi, is expected to challenge the Mini with a new luxury subcompact called the Audi A1 in 2009.

Reporting by Jui Chakravorty, editing by Richard Chang