Thought I'd never hear this: Automakers asking for higher gas tax

nthfinity · Jan 13, 2009

http://www.usatoday.com/money/autos/2009-01-12-gas-tax-automakers-small-car-sales_N.htm

By Sharon Silke Carty, USA TODAY
DETROIT The auto industry is warming up to the idea of higher taxes on gasoline to force buyers to keep considering fuel-efficient and small cars.

Automakers have shifted dramatically to production of small cars and expensive fuel-saving technologies partly to meet looming stricter government fuel-economy regulations.

The carmakers acknowledge that raising the gas tax is an unpopular idea, but they also saw how fast consumer preference shifted toward small cars when gasoline prices topped $4 a gallon last summer. Without that economic incentive, the tide is turning back to bigger cars, crossovers and trucks.

And that could be a problem for automakers such as General Motors, (GM) which are investing millions to get fuel-saving technology on the road. At the North American International Auto Show Monday, GM CEO Rick Wagoner said taxing gas or providing rebates on fuel-efficient cars "is going to be the most effective way to move the needle fast."

Gas now is taxed at the federal level at 18.4 cents a gallon. States tack on their own taxes, as do some metro areas. But the total pales in comparison with what European drivers pay. Taxes are about 60% of the pump price in Europe pushing fuel prices as high as $6 a gallon now.

Automakers want to be able to charge premium prices for their smaller cars to make up for profits lost when sales of high-margin trucks fell off a cliff. They also must cover the cost of fuel-economy-related hardware and materials needed to meet federal rules as much as $1,000 a car.

The issue could be crucial even for Toyota, considered financially stronger than the U.S. automakers. On Monday, Toyota unveiled the new Prius hybrid, which will get more than 50 miles per gallon in the city and is coming to the U.S. this summer.

Bob Carter, group vice president and general manager of the Toyota division, says consumers respond to gas prices: When they're high, Prius sales are strong; when they're low, Prius sales fall.

That doesn't surprise Mike Jackson, CEO of car-shopping site AutoNation, who has pushed for higher fuel taxes for more than a year. He says consumers talk about wanting fuel-efficient cars but don't buy them until gas prices are sky-high.

"We watched the consumer stampede to fuel efficiency in May, and now the herd is getting ready to stampede back to their old ways," says Jackson. "We have the most unbelievable technology around fuel efficiency, but no one will buy it if gas prices are this low."
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It's a sign, and perhaps a result of the bailout; forcing Detroit to make cars that people don't feel bound to buy... further deepening a looming bankruptcy...

Meanwhile, this is why I LOVE Ford's current position. They have no requirement that the other two have hanging like a cold shadow over them

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Thought I'd never hear this: Automakers asking for higher gas tax

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