Carmakers Blitz Lawmakers Amid Fight Over Fuel-Economy Rule

Carmakers Blitz Lawmakers Amid Fight Over Fuel-Economy Rule
President Barack Obama tours a General Motors plant in Hamtramck, Michigan. Photographer: Jim Watson/AFP/Getty Images

The U.S. auto industry, rejuvenated after the government’s $80 billion bailout of General Motors Co. and Chrysler Group LLC, is stepping up its lobbying and spending on political donations as the White House moves to boost fuel economy standards.

GM spent $5.5 million during the first six months of 2011 to try to influence Congress and federal agencies, up from $4.1 million in the same period a year earlier, according to lobbying disclosures released yesterday. Ford Motor Co. spent $3.4 million in 2011, versus $2.8 million in 2010. Chrysler more than doubled its lobbying spending to $2.4 million from $1.1 million. Auto companies’ political action committees also gave more to federal campaigns, Federal Election Commission reports show.

The White House is in talks with automakers on fuel economy standards for 2017 to 2025. President Barack Obama’s administration in June floated the idea of a fleetwide average of 56.2 miles per gallon by the end of the period, up from 27.3 mpg now. That represents about a 5 percent annual increase. Regulators’ final proposal is due in September.

“It is a life-or-death issue” for the automakers, James Burnley, a former U.S. transportation secretary, said in a telephone interview. “They have to use the usual tools to educate decision-makers.”

The new miles-per-gallon mandate is the most important issue for the companies since the first federal fuel-economy standards took effect in 1977 because the requirements could force them to build cars that consumers may not want to pay for, said Rebecca Lindland, an analyst with consultant IHS Automotive in Lexington, Massachusetts.

Earnings Effect

Higher standards require pricier technology and may hurt earnings as buyers wait longer between purchases, carmakers say.

Reaching a 56.2 mpg average by 2025 would be “tough,” said Mark Reuss, president of GM’s North American operations.

“It’s not an either-or thing; it’s how do you get there,” Reuss said in Detroit in June. “It’s how you get there with cars and trucks that customers really want to buy at a cost basis that doesn’t put unreasonable cost into the car that people don’t pay for.”

U.S. carmakers are trying to work with the government to increase fuel-economy standards more slowly, at a pace they can live with, rather than wind up with proposals that they’ll fight later, Lindland said. Automakers have asked the administration to reevaluate standards midway through the eight-year program, saying the technology necessary for 2025 targets may not be in place yet.

Cooperating, Not Blocking

That’s a change from the 1990s, when the car companies helped block all efforts to set higher standards. The miles-per-gallon standard for cars has been the same since 1989, and will only rise next year, when a 2009 regulation takes effect.

To buttress its lobbying force, Detroit-based GM, which emerged from bankruptcy in July 2009, hired three new outside firms this year, including Upstream Consulting, headed by former U.S. Representative Matt Salmon, an Arizona Republican. Auburn Hills, Michigan-based Chrysler, controlled by Fiat SpA, added one new firm.

GM’s political action committee made $91,500 in donations to candidates during the first six months of 2011 after keeping its checkbook closed during the same period two years earlier. The U.S. government owns 35 percent of GM shares following a November 2010 IPO.

The PAC of Dearborn, Michigan-based Ford increased its contributions to $223,500 from $128,000 from January to June 2009. Chrysler no longer has a PAC.

Not For Long

“An industry as all-American as autos won’t find doors closed to them for long on Capitol Hill,” said Rogan Kersh, associate dean at New York University’s Wagner School. “Auto lobbyists had to tread carefully in Washington for a couple of years after the bailout, but as business and profits are restored, so is the industry’s credibility -- and clout -- with lawmakers.”

Toyota Motor Corp.’s lobbying declined to $2.3 million during the first six months of 2011 from $2.5 million a year earlier, when the Toyota City, Japan-based company’s chief executive testified before Congress about vehicle defects. The automaker doesn’t have a PAC.

The Alliance of Automobile Manufacturers, the biggest of the auto trade groups, spent $3.9 million to lobby during the first six months of 2011, up from $3.1 million during the same period a year earlier. The group is seeking a chief executive to succeed former Representative Dave McCurdy, an Oklahoma Democrat, who moved to the American Gas Association.

Closer to Lawmakers

The Association of International Automobile Manufacturers changed its name in January to the Association of Global Automakers and moved from Arlington, Virginia, to downtown Washington to be closer to decision-makers and its members, Chief Executive Officer Michael Stanton said. The group boosted its lobbying spending to $760,000 in 2011 from $640,000 in 2010.

And the American Automotive Policy Council hired former Missouri Governor Matt Blunt, son of Republican Senator Roy Blunt, as its new president. The group spent $97,500 to lobby from January to June, down from $170,000 in 2010.

Ford, GM and Chrysler belong to both the policy council and the Auto Alliance.

“There’s increasingly a sense that what happens in Washington, D.C., is important in the auto industry,” said Gloria Bergquist, a vice president with the Auto Alliance. “That wasn’t necessarily the case, even as recently as a few years ago.”

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