Gas guzzling

E: The Environmental Magazine, August, 1995 by Adam Reitzes

For six years, the plucky little Geo Metro XFi hatchback was the most fuel-efficient car on the market, with an Environmental Protection Agency (EPA) mileage rating of 53 miles per gallon (mpg) in the city and 58 on the highway. But for 1995, this American mileage champ -- the little engine that could -- got the ax, having accounted for only 10 percent or less of overall Metro sales.

The '95 Metros feature larger engines than the XFi, thicker steel, more safety features and more interior room. According to Scott Leonard, Geo product manager, "Our customer research shows that people want good fuel economy, but more important to them is better quality. Our additions for 1995 give the Metro a more substantial feel, but they also add weight, which is counterproductive to fuel economy."

The Honda Civic VX hatchback, at 47 mpg city/56 highway, is enjoying the national crown since the demise of the XFi -- yet it accounted for only one percent of U.S. Honda sales last year, and is considered by Honda "a niche product" in a time when the market for hatchbacks "has lost momentum." What happened to Americans' concern for higher gas mileage? Why are top fuel-misers starting to look like an endangered species?

The XFi's sad story is repeated across the market, as car companies abandon the dirt-cheap "econoboxes" of yesteryear. Propelled by customer dissatisfaction over issues like sluggish performance, fragility and workmanship, the small cars have been steadily getting bigger. Says Honda's Michael Ackerman, "The Civic has gotten larger over time -- it's not even considered an entry-level vehicle anymore. The VX is a three-door hatchback, and there's not a huge market for those, compared with buyers looking for performance or sport-utility vehicles. Even the Accord is no longer a fuel-efficient econobox." The moral of the story: There are limits to what Americans will sacrifice for fuel efficiency and their bottom-line demands include air bags, side-impact bars, four-cylinder engines, and a certain level of creature comfort.

This moral has not been lost on automobile advertisers, who are more likely to pitch a car's price than its gas mileage. Although many ads will briefly refer to fuel economy as one of a "package" of product attributes, consumers who mainly want good mileage from a car are considered too small a group to target. Cheap gas prices have a lot to do with consumers' apathy about fuel economy, and the subsequent lack of pressure on car companies to do better. Honda has not focused any ads on the VX's mileage leadership, because its research shows that "fuel efficiency is not one of the top factors for buying a vehicle in todays marketplace" -- a view that is widely accepted.

Greg Martin, a press spokesman for Saturn, says that fuel economy is just one reason people buy the company's cars. "There are a number of factors to the buying experience in this market, including practicality and cost," he says. "Fuel economy is balanced with other considerations, primarily safety. Our research shows they won't sacrifice safety for fuel economy.'

Unfortunately, the federal government helped create the problem by abandoning the conservation message it promoted in the 70s. Its recent priority seems to be keeping gas prices down through low energy taxes and military intervention in the Middle East.

Regulation also plays a role. In 1975, Congress passed the Energy Policy and Conservation Act (EPCA), forcing manufacturers to raise the fuel efficiency of their cars and light trucks. By setting Corporate Average Fuel Economy (CAFE) standards, government was able to double net fuel efficiency. But the current standard for passenger cars (27.5 mpg) has been stagnant since 1985; the standard for light trucks has risen, but only slightly (to 20.6 mpg). Although President Clinton talked about raising CAFE standards in his campaign, nothing has been done. According to Ann Mesnikoff of the Washington-based Center for Auto Safety, "I wouldn't assume that [revising CAFE] is at the top of anyone's list. There's just nothing underway in Congress right now to raise the standards, though they are starting to look at greenhouse emissions."

The structure of the CAFE standard itself may be part of the problem. To comply, a company must show that the average fuel efficiency rating of its entire fleet of new cars meets or exceeds the standards. But the rules are quite broad. General Motors. for example, can use its efficient Geos to balance its gas-guzzler-Cadillacs. A company that falls short of the standard pays a penalty, but it can use a previous year's higher efficiency as a credit for a current shortfall. Car companies can even borrow against anticipated higher ratings in future years.

"Domestic manufacturers have not had to pay a fine on any of their Fleets" since the conservation bill was passed, says Orron Kee of the Department of Transportation's Office of Market Incentives. And, although the system of CAFE credits and debits encourages compliance with minimum standards, it provides no incentives for increasing overall efficiency above the minimum. If the CAFE standard doesn't go up, neither does nationwide fuel economy.