Spotlight on Corporate Practices: What is the Future for US Auto Industry?

In the recent past, the US auto industry has failed on two critical fronts. It has been unable to compete successfully with Japanese and European auto producers and it has not made fuel-efficient, safe vehicles. As a result, the US auto industry is in deep financial trouble and American cars pollute more and are less safe than those made elsewhere. While many factors contribute to the auto industry’s problems, in this case the decision by auto industry executives to sacrifice public health for profits by focusing on SUVs rather than on safer, more efficient cars ended up hurting rather than helping their own bottom line. Now, however, two recent developments provide advocates, public officials and the auto industry with new impetus to solve both their financial and public health problems. A recent Supreme Court decision and new public opinion polls that show auto worker and public support for more effective public oversight of the auto industry provide advocates with an opportunity to mobilize political support for federal action to encourage the auto industry to make cars that pollute less.

Supreme Court Rules Against Bush Administration and EPA on Greenhouse Gas Emissions

On April 3, 2007 the US Supreme Court ruled that the Environmental Protection Agency (EPA) violated the Clean Air Act when it refused to regulate new vehicle emission standards as a way to reduce air pollutants connected with global warming. The case, Commonwealth of Massachusetts et al v. Environmental Protection Agency, dates from 1999. It began when The International Center for Technology Assessment and other groups petitioned the EPA to set stricter greenhouse gas emissions standards for new cars. The EPA declined the petition four years later and argued that it did not have the authority to regulate greenhouse gases. The agency further asserted that even if it did have such authority, it still might refuse to act because the linkages between greenhouse gases and global warming were still scientifically uncertain. In its 5-4 decision, the Supreme Court rebuked the Bush Administration, finding that the EPA had acted illegally and had violated the Clean Air Act. In a press release issued by the International Center for Technology Assessment, legal director Joseph Mendelson stated “The Court recognized that the debate over global warming has ended and that states and individuals are suffering from global warming injuries and impacts right now.” The decision is being hailed as a landmark environmental ruling.

Survey Shows Majority of Michigan Autoworkers Favor Auto Fuel-Efficiency

On February 28, 2007, the Civil Society Institute (CSI) and 40MPG.org released new research that showed that 67% of Michigan autoworkers agreed with the statement that Washington could “help U.S. automakers be more competitive by increasing the federal fuel-efficiency standard to 40 miles per gallon.” The survey of Michigan residents conducted for CSI by Opinion Research Corporation (ORC) also found that 84% of Michigan residents agreed that the U.S. auto industry was in trouble. When asked to identify the top problems the auto industry was facing, respondents identified the failure of the industry to offer the best technology, including improved fuel efficiency, as the most serious issue. The second highest ranking issue was the over production of fuel-inefficient vehicles, including SUVs. More than half of the respondents strongly agreed that higher federal fuel efficiency standards were needed to reduce dependence on foreign oil, reduce global warming and conserve energy.

The results of this survey were consistent with a prior national survey conducted by ORC for CSI and other CSI/ 40MPG.org research. According to the results of this earlier survey, four out of 5 Americans, including 76% of Republicans and Independents and 86% of Democrats, supported the idea of “Congress taking the lead to achieve the highest possible fuel efficiency as quickly as possible.” While the American public clearly supports the idea of fuel efficient cars, CSI and 40MPG.org’s research illustrates that the number of fuel efficient vehicles (defined as those vehicles with gas mileage of at least 40mpg) dropped from 5 to 2 vehicles between 2005 and 2007. Meanwhile, overseas during the same period, the number of fuel efficient cars available to consumers increased from 86 to 113 demonstrating a clear fuel efficiency gap between U.S. and foreign vehicles. Nearly two thirds of the fuel efficient cars available overseas are produced by U.S. auto manufacturers or foreign manufacturers which do a high volume of sales in the United States. The majority of Americans (88%) felt that U.S. consumers should have access to these vehicles. CSI/40MPG.org’s research indicates that given this support, there is a very large market – 2.5 million U.S. consumers – for these vehicles. While the technology for more fuel efficient cars clearly exists and consumer demand for such vehicles is high, U.S. automakers have failed to adopt different technology. Furthermore, the U.S. government has failed to enact federal fuel efficiency standards that would support its development. With gas pricespredicted to hit nearly $4 a gallon this summer, this reluctance seems all the more troubling.

40 MPG.org is an advocacy campaign to make US motor vehicles more fuel efficient. It is sponsored by The Civil Society Institute, a non profit group that seeks to catalyze public mobilization on important policy issues.