Obama maintains fuel pressure

US president Barack Obama might be preparing to offer more billion-dollar loans to the struggling car-makers in Detroit, but he is also maintaining the pressure on them to improve fuel economy.

However, he has softened the fuel economy blow by offering to guarantee the warranties offered on vehicles made by the struggling General Motors and Chrysler groups.

The president has enacted the next stage of the 2007 corporate average fuel economy (CAFE) improvement legislation that his predecessor George W. Bush ignored in his last months in office.

From 2011, cars sold in the US will have to average 30.2 miles per US gallon (7.8L/100km) across the fleet.

This is a tightening of 9.8 per cent from the current standard of 27.5mpg (8.55L/100km) in the first step in a program designed to raise the average fuel consumption in the US to 35mpg (6.7L/100km) by 2020.

However, the National Highway Traffic and Safety Administration decided against laying down economy standards beyond 2011 due to the financial pressures bearing down on the Detroit manufacturers.

The economy reductions are calculated for each manufacturer selling cars in America.

At the top of the scale is Porsche, which has to achieve a target of 31.2mpg, although most of its vehicles have large-capacity engines, often turbocharged for extra performance.

The US transportation department estimated that the more stringent fuel economy standards would cost the industry $US1.46 billion ($A2.15 billion).

The department also estimated that the cuts would benefit the US by $US1.92 billion, principally by cutting fuel consumption by 900 million US gallons (3.4 billion litres).

President Obama softened the news about the stiffer fuel economy standards by saying the federal government would pay for warranty repairs on GM and Chrysler vehicles if either company were incapable.

“Let me say this as plainly as I can. If you buy a car from General Motors or Chrysler, you will be able to get your car serviced and repaired just like always,” president Obama said in a bid to allay fears raised by the possibility of a bankruptcy for GM or Chrysler.

“Your warranty will be safe. In fact, it will be safer than it has ever been because, starting today, the United States will stand behind your warranty.” In their survival plans submitted to the US government in February, both GM and Chrysler said going in to bankruptcy would kill sales because buyers would be worried they would not be able to get their cars fixed.

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