YORK -- Automakers will likely make billions more dollars
in profits - under proposed new national gas mileage and emissions
standards that will be finalized later this summer. A new report
- produced by Citi Investment Research and Analysis in collaboration
with Ceres - shows that American automakers will likely enjoy
the biggest percentage increase in profits (6.3 percent), pulling
in an extra $2.44 billion dollars in 2020 under the standards.
The industry as a whole will also likely see big profits, earning
a 5.3 percent increase in profits of $4.76 billion in 2020.
who invest in more efficient vehicles are investing wisely. Given
the volatility of gas prices - and the likelihood that they'll
head through the roof again - it's clear that customers want better
fuel economy and delivering it means a better bottom line for
the industry," said Carol Lee Rawn, Transportation Director
of Ceres, which leads a national coalition of investors and public
interest groups working with companies to address global sustainability
report, "Fuel Economy Focus: Perspectives on 2020 Industry
Implications," evaluates the impact that meeting the proposed
fuel economy/GHG standards would have on the car industry in the
finds that meeting the proposed standards will likely boost total
vehicle sales for the automotive industry as a whole by about
four percent or around 600,000 vehicles. As a group Ford, Chrysler,
and GM would also likely see an improvement over baseline vehicle
sales by about four percent or 300,000 vehicles. Foreign automakers
would likely record a three percent uptick in sales representing
around 300,000 vehicles. Sales would increase because with increased
fuel economy the overall cost of operating a car will go down
and, consequently, consumers will have more spending power to
buy more vehicles or more expensive vehicles.
the automotive industry as a whole will benefit by meeting the
new standards, the Detroit Three will enjoy the highest relative
profits boost," said Walter McManus, School of Business Administration
at Oakland University, who conducted the sales and profits analysis.
"The reason we see these increased benefits for American
automakers is because compared to foreign automakers they are
currently more heavily invested in lower mileage trucks and cars.
Under these standards the Detroit Three would have a greater potential
to add customer value to those vehicles with improved fuel economy."
to the report, the new standards could largely be met by using
existing technologies that improve the performance of cars powered
by traditional internal combustion engines.
today are already working on the improvements to the internal
combustion engine and overall vehicle design to get us to 54.5
mpg. Turbocharged direct injection, advanced transmissions, electric
power steering, low-rolling-resistance tires, turbo charging,
variable valve lift and timing are available now and they continue
to improve," said Alan Baum, founder of Baum and Associates,
who conducted the sector analysis. "These technologies are
not only cost-effective, but also make for better performing vehicles
than those currently on the market."
finds that the added technologies required to meet the proposed
fuel economy improvements are cost-effective for consumers. "Even
if gasoline prices dropped to as low as $1.50 per gallon in 2020,
money saved during vehicle use would fully offset the cost of
added fuel economy technology," said Dan Meszler of Meszler
Engineering Services, who conducted the cost analysis. "Since
gasoline prices are over twice that right now, it's likely that
consumer savings on fuel purchases will far outweigh the additional
money consumers will spend on a new car."
is an advocate for sustainability leadership. Ceres mobilizes
a powerful coalition of investors, companies and public interest
groups to accelerate and expand the adoption of sustainable business
practices and solutions to build a healthy global economy. Ceres
also directs the Investor Network on Climate Risk (INCR), a network
of 100 institutional investors with collective assets totaling
more than $10 trillion. For details, visit http://www.ceres.org.
Focus Electric Becomes America’s Most Fuel-Efficient Five-Passenger
Vehicle with 110 MPGe EPA Rating
2020 sales forecast prior to the impacts of the higher fuel economy
(each number should be multiplied by 1,000).
U.S. Sales by powertrain type for 2015 and 2020