New Focus on Fuel Efficiency?

THE auto industry is stuck between Iraq and a hard place. Although many major oil companies are temporarily freezing gasoline prices, further turmoil in the Mideast could put a quick end to that moratorium. And with gasoline already up 20 cents or more in many parts of the country, automakers are worrying about the impact on their market.

Further, the volatility of the oil market lends new credibility to critics demanding a big hike in fuel economy.

Automakers oppose such legislated increases, countering that consumers should be able to ``vote'' with their dollars. Over the last five years, motorists have been voting in favor of bigger, more powerful, and less fuel-efficient automobiles.

But the sudden runup in fuel prices has sent a shiver down the collective spine of the motoring public. The question is what these consumers will do in response.

``I don't see a return to what happened in the '70s,'' says George McCabe, a deputy manager of Mazda Motors of America. ``I think Americans are more conditioned to paying higher prices than they were back then.''

Not everyone buys that assessment.

``If prices [climb] 50 cents a gallon ... that will push the market towards more fuel-efficient cars,'' says J. C. ``Jim'' Perkins, general manager of General Motors' Chevrolet division.

Chevrolet could be prepared for a moderate shift in market demand with its Geo line, including the sporty Storm subcompact and the Metro minicar, among the nation's most fuel-efficient models. Both are produced for GM by Japanese affiliates. GM will also launch its high-mileage Saturn subcompacts this fall, albeit initially in low volumes.

Ford recently introduced a new version of the popular Escort subcompact, a car it can produce in much higher volume.

The only domestic carmaker without a competitive, high-mileage subcompact is Chrysler. It dropped its aging Omni and Horizon subcompacts early this year.

As a group, the Big Three can also shift production schedules, emphasizing smaller cars and more four-cylinder engines. But that may not be enough, says David Cole, director of the Office for the Study of Automotive Transportation, University of Michigan.

``The Japanese,'' Cole laments, ``are in a better position for a new fuel crisis.''

Though the Japanese have also been introducing larger and more powerful models, the majority of their models, such as the new 1991 version of the Nissan Sentra, still use fuel-stingy four-cylinder engines.

``We could shift production at our Smyrna plant away from pickup trucks to the new Sentra within 90 to 120 days,'' says Nissan's Tom Mignanelli. He predicts the current oil shock ``will be short-lived.''

Perhaps. But William Roberts, legislative director for the Environmental Defense Fund (EDF), warns: ``The Iraqi crisis, if anything, underscores our need to pursue the goal of energy reduction: both to reduce our dependence on foreign oil and also to help solve environmental problems such as global warming.''

Today's new cars are twice as efficient as they were in the mid-1970s, when Congress established the Corporate Average Fuel Economy (CAFE) rules. But critics feel the current 27.5 miles per gallon (mpg) standard isn't enough. Measures under consideration by Congress, such as one proposed by the EDF, could boost CAFE to 40-41 mpg by the end of the century.

``That would be disastrous,'' says Michigan's Cole. He insists the domestic carmakers don't have the technology or financial resources to meet such targets. ``That would hand the market to the Japanese,'' Cole says.

Critics scoff at such arguments, and accuse the Big Three of foot-dragging. ``When I'm testifying before Congress and telling them we don't know how to do this or that, they throw back at me the fact that we've said that before,'' acknowledges Dr. Richard Klimisch, GM's director of environmental activities.

David Hagen, general manager of Ford's engine division, feels some increase in CAFE ``is inevitable.'' But going to 40 miles a gallon, he maintains, would be ``ridiculous,'' unless we want to eliminate anything bigger than ``compacts and subcompacts.''