Posted on: Thursday, April 8, 2004

Automakers say gas tax may ease thirst for big cars

By David Kiley
USA Today

NEW YORK — Senior auto executives said yesterday that they favor a gasoline tax along with tax breaks to encourage consumers to buy more fuel-efficient vehicles.

They hinted that their fleets could achieve a fuel-economy average as high as 36 miles a gallon in the next decade if the government gives consumers more incentives to buy fuel-efficient vehicles.

Ford Motor Chairman Bill Ford and General Motors Vice Chairman Bob Lutz were among those complaining that attempts to increase fuel economy were being thwarted by consumers' desire for larger vehicles and the lack of government help in making smaller vehicles more financially attractive.

"There is a disconnect between what society says it wants (more fuel-efficient vehicles) and what the individual consumer is lining up to buy," Ford said.

In the first quarter of the year, sport utility vehicle sales were up 20 percent over last year, and full-size pickups set a sales record.

Ford said he has long favored both tax breaks and a gas tax to push sales of fuel-efficient vehicles.

Ford Motor Co. is preparing to introduce its first hybrid, the Escape SUV, this summer. It will add a hybrid Ford car and a hybrid Mercury SUV by 2007.

A tax deduction this year of $1,500 for alternative-energy vehicles such as hybrids phases out by 2007. A proposed $3,000 tax credit for such vehicles was part of the Bush administration's energy bill that failed to pass last year.

In Europe, smaller vehicles are the norm because taxes push gasoline to around $5 a gallon.

"When fuel is cheap, people buy bigger vehicles and you can't regulate yourself out of that," said General Motors' Lutz. "But you can tax yourself out of it," he said.