Jan. 7 (Bloomberg) -- The Bush administration is delaying rules requiring cars and light trucks to be more fuel-efficient, saying the industry needs more time because of its financial struggles.

The decision, announced today by the Transportation Department, postpones action on a 2007 agreement by Congress and President George W. Bush to raise Corporate Average Fuel Economy for the first time in three decades. That leaves it up to President-elect Barack Obama’s administration to set standards for 2011 models before a March 31 deadline.

The trade association representing automakers said it didn’t want the delay, and it may be short-lived. Obama, who has supported stricter fuel-economy targets, can make the rules final after he takes office on Jan. 20, said Mike Omotoso, a powertrain analyst at J.D. Power & Associates in Troy, Michigan.

The Bush administration doesn’t “want to be seen as making life tougher for the auto industry than it already is,” Omotoso said in a phone interview today. “If the Democrats want to be seen as being tough on the industry right now,” the departing Republican administration is “saying, ‘That’s fine, but we’re washing our hands of it.’”

Omotoso said the new standards will add $65 billion to $80 billion in costs to the industry through 2020.

“The president-elect is committed to achieving an increase in the efficiency of our auto fleet as it is important to accomplishing our goal of reducing dependence on oil,” said Jen Psaki, an Obama transition spokeswoman. “He will review this decision and the appropriate policy when he is president.”

Seeking Certainty

Dan Becker, director of the Safe Climate Campaign, which is seeking stricter mileage laws, criticized the transportation agency’s delay.

“The administration should at least put out the modest step forward that it represents and then let the Obama administration improve on it,” Becker said.

Under a preliminary regulation the Bush administration proposed in April, vehicle standards would increase an average of 4.5 percent a year through 2015.

Those guidelines would raise the car standard to 35.7 miles per gallon by 2015, from 27.5. Light trucks would go to 28.6 mpg, from 22.5 mpg in 2008.

Becker said he wants Obama to set standards of at least 35 mpg by 2015 and 42.5 mpg by 2020.

‘Recent Difficulties’

“The recent financial difficulties of the automobile industry will require the next administration to conduct a thorough review of matters,” the Transportation Department said in a statement today in Washington.

Auto manufacturers, which will have to adjust engines to meet the new standards, didn’t seek the delay because they need certainty about the rules, said Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, in an interview.

“It is important particularly in these difficult economic times that manufacturers have certainty and know the standards that their vehicles must meet,” said Territo, whose group is based in Washington. “This decision further delays their ability to finalize future product plans.”

Bill Adams, a spokesman at the Transportation Department, had no further comment.

U.S. auto sales in December plunged 36 percent, leaving the industry’s 2008 sales volume at a 16-year low. Sales of the top model of trucks made by Ford Motor Co., based in Dearborn, Michigan, and Detroit-based GM, fell 25 percent in a year when gasoline prices rose to a record in July. The average price of a gallon of gas peaked at $4.11, according to AAA, the largest U.S. motorist group.

The Treasury Department last month pledged as much as $17.4 billion in federal loans to GM, the largest U.S. automaker, and Chrysler LLC, the third-largest. Ford Motor Co., the second- largest, sought only a credit line.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

Last Updated: January 7, 2009 18:56 EST