1989 Auto Fuel Standards Set at 26.5 m.p.g.

The Transportation Department on Monday set fuel economy standards for 1989 passenger cars at 26.5 miles per gallon of gasoline, a level the nation’s two largest auto makers say they could meet without layoffs and production cuts.

The department’s decision kept the fuel economy average required for each auto manufacturer from increasing to the 27.5 m.p.g. enacted by Congress in 1975.

Since 1986, the auto makers have been required to meet a 26 m.p.g. standard.

A higher requirement “would have clearly put our domestic full-line manufacturers at a competitive disadvantage compared to some foreign manufacturers, especially the Asians, who have been building only small cars and can easily meet the fuel economy requirements,” said Transportation Secretary James H. Burnley IV.

The order issued by the National Highway Traffic Safety Administration, an agency within the Transportation Department, said 26.5 m.p.g. represented the level attainable by General Motors Corp. and Ford Motor Co. in their domestic fleets of passenger cars without “harmful production restrictions and without any significant restrictions on consumer choice.”

“Thus, no job or sales losses should result from GM and Ford, as well as the manufacturers of most foreign vehicles sold in this country, meeting the standard; indeed, that standard should help preserve the ability of the two domestic companies to recapture sales and jobs from competitors,” the NHTSA order said.

Law Called ‘Outdated’

GM and Ford, which had warned that higher fuel economy standards would force cutbacks of big-car production and cost the industry hundreds of thousands of jobs, were quick to praise the order. Consumer groups were critical.

GM said the decision “was in the best interest of American workers and consumer choice.” The company said the 1975 law that established the corporate average fuel economy, or CAFE, standards was “outdated.”

Ford said the agency’s decision “recognizes that consumer preferences resulting from low fuel prices have placed a particularly heavy burden on our efforts to comply with the 27.5 m.p.g. standard.”

The nation’s third-largest auto maker, Chrysler Corp., whose car line is concentrated in the smaller, more fuel-efficient models, said only that it would exceed 27.5 m.p.g. in 1989 and said “a meaningful gasoline tax would eliminate the need for a CAFE-like regulatory system.”