Detroit's Blue State Blues - 10 States Toughen GHG, Emissions Rules

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DETROIT, April 22 - "Setting aside its home base in the Upper Midwest, Detroit has a blue state problem - and it is about to get worse. Washington and Oregon plan to become the 9th and 10th states to adopt California's tough car emissions rules, forming an increasingly potent market for more fuel-efficient vehicles on the West Coast and in the Northeast.

The states that already follow California's stringent tailpipe emissions rules also happened to fall in the blue column of the 2004 presidential election: Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island and Vermont.

The electoral power of those states may fall well short of a majority but their buying power is still formidable, which puts considerable pressure on automakers to develop more fuel-efficient vehicles. Together, the 10 coastal states account for 29 percent of the nation's auto market, according to R. L. Polk, which tracks car registration data. Further pressure comes from Canada, which recently forced automakers to agree to substantial cuts in emissions of global warming gases; California has a similar plan that automakers are challenging in court.

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The two companies, whose stocks have been battered this year for a variety of reasons, have bet their businesses largely on sales of big sport utility vehicles and pickup trucks. Faced with slowing sales of medium and large S.U.V.'s, they are moving in divergent directions, partly because of strategy and partly because of their particular product cycles. G.M. is diverting engineering resources from passenger cars to rush a new generation of its largest S.U.V.'s into production, betting that new models will stimulate the market for big sport utility vehicles. By contrast, at Ford - whose overall fleet is actually less fuel efficient than G.M.'s - executives say that they must diversify beyond big S.U.V.'s and that they will bring a crop of midsize sedans to the market later this year. "The reality is that both companies are heavily invested in large S.U.V.'s and both companies have more risk than they have opportunity with their current sales mix," said John Casesa, an auto analyst at Merrill Lynch. "There is a secular trend towards lower emissions and higher fuel economy, which can only be met with lots of technology investment and probably smaller vehicles. There's only so much you can do with a Suburban."

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http://www.nytimes.com/2005/04/23/business/23fuel.html?adxnnl=1&adxnnlx=1114265027-utujaUmKFsOv/re8VzSY7Q