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GM’s Lutz: 4% per Year Fuel Economy Proposals Could Add $6,000 to Vehicle Cost

Proposed nominal international fuel economy standards. Due to the different test cycles used in different countries, a normalized plot would likely show a wider gap between the US and others. (An and Sauer, 2004) Click to enlarge.

Speaking to reporters after unveiling the three GM concept minicars at the New York International auto show, GM Vice Chairman Bob Lutz said that meeting a mandated increase in fuel economy of 4% per year could add $5,000 to $6,000 to a vehicle’s cost.

Following President Bush’s State of the Union address in which he proposed such a 4% per year increase in fuel economy through 2017, Congress has introduced a number of bills, with some variations, built around that basic approach.

“You tell me what happens to the market if these cars come out and everybody looks at the one they own and the new one is six or seven thousand dollars more expensive,” Lutz said.“This technology does not come for free.”

US Transportation Secretary Mary Peters countered Lutz’s assessment, saying that the 4% proposals are “realistic.” A Bush Administration analysis of its proposal concluded it would cost the auto industry $114 billion between 2010 and 2017, including $40 billion for GM. The Administration also said that increased savings on fuel would offset the increased cost to the consumer.

Lutz said that wider use of E85 would accomplish a far greater reduction in gasoline consumption and reliance on foreign oil than an increase in fuel economy, and suggested a national push on building out the E85 infrastructure. He did not suggest where the ethanol would come from.

Lutz also said that while GM will build at least one of the minicars, it currently was unlikely that GM will offer them for sale in the US, absent a prolonged increase in fuel prices or an “unforeseen” change in fashion for small cars in the country.

Lutz said that all of the minicars would get in the high 40 or 50 mpg fuel economy range, could be priced starting at $10,000 and could be built in either China or India. The vehicles currently are not being designed to meet US safety requirements.



Lutz is an over-paid carnival barker!


Between smaller pistons, lighter blocks and components, turbochargers, diesel and electric motors, cats and particle filters, I can see maybe $2K per car. $114B sounds like a helluva full retail "getting dragged down the hall kicking and screaming" fee.


Lutz said that all of the minicars would get in the high 40 or 50 mpg fuel economy range, could be priced starting at $10,000 and could be built in either China or India. The vehicles currently are not being designed to meet US safety requirements.

Speaking to reporters after unveiling the three GM concept minicars at the New York International auto show, GM Vice Chairman Bob Lutz said that meeting a mandated increase in fuel economy of 4% per year could add $5,000 to $6,000 to a vehicle’s cost.

Small cars and hybrids are flying off the lots, a sub-compact could be in the works that gets 40-50mpg for $5000 less than current compact offerings, but somehow we're adding $5-6k to the vehicle's cost? Do taller highway gearing, less weight, and smaller engines cost $5-6k more? Unless he's referring to a plug-in hybridization of every model, wth is he going on about?

Lou Grinzo

One of the news stories on the minicars quoted someone from GM as saying that their internal projections say that US gasoline will be in the $2.50 range "for some time."

If that's an accurate depiction of their assessment of the oil market, then heaven help them, their employees, and their suppliers.


NONSENSE, Toyota and Honda are already doing it. GM is bent on holding on to their failing business model. Fight innovation, sue CARB/CAFE, sell large vehicles with large profit margins. Once gas hits $4-$5 people will start buying more practical cars. We are one crisis away from this happening. Then GM will be caught with their pants down...again. Although I would love to see an American company make it big again, with attitudes like this they and Ford will go down with the ship. Already the gains from Hybrids are being put into increasing performance NOT mileage, an oxymoron if eve I heard one.


“You tell me what happens to the market..." If you can't compete in the market then you go under. If Lutz and everyone else at GM believes his obvious lie then they should just pull the plug now and fold. GM is heading that way without new regulations, so why should we (Car buyers)suffer with lousy cars while the government props up their incompetence? GM's business model seems to be based on Iraq strategies, or is it the other way around? How pathetic and embarrassing, does anyone believe his rhetoric? (other than Bush that is) Ethanol and Chinese minicars will not save GM, just go away GM and stop bothering us with the constant lies and excuses.


"GM’s Lutz: Proposed 4% per Year Fuel Economy Proposals Could Add $6,000 to Vehicle Cost"

Or you downsize, slightly, from whatever level you're at, and get 10%+ fuel economy improvement, while saving money on the vehicle was well.

Shorter: "could" is a wonderful word.


Hmmm, 4% improvement compounded yearly on a current 4 cylinder camry turns out to be the same combined gas mileage on a camry hybrid...except that is 9 years of improvements taken care of today.

They sure have no problem increasing horsepower & torque 5-10% every year.


Lutz's comments are telling of why the domestics are in the predicament they're in. Instead of lobbying against progress- GM, Ford, and DCX should embrace the efficiency challenge that the market demands.

A regime change is being played out before our eyes, folks. Look at March's automobile sales results: domestics continue to bleed money while Toyota & Honda (the alleged "green" car manufacturers) posted 7-8% gains. Consumers are voting with their pocket books and the domestics are clearly "ot of touch" with the demands of the market.

GM goes on a public relations push to trump calls for efficiency while releasing more powerful versions of their Hummer H2, H3, Buicks, etc at the New York auto show. Then they peddle 3 "concept" micro cars (that the US market desperately needs) and ask us to vote for them (never telling the public they have no intentions of building them for US consumption.) What kind of insane marketing scheme is that? Ask the US consumer to vote for a vehicle destined for the Chinese and Indian markets? Or were these 3 concepts displayed in NY to give GM the appearance of being "green." You decide.

Now over-hyped Lutz and their media monkeys go on the O'Reilly Factor and spout nonsense about how GM US models have the same fuel economy standards as European models. Gibberish; it's all smoke and mirrors.

How is Ford's turn around plan doing? In the news today Ford awarded CEO Mulally an exorbitant pay package while they fired thousands of salaried workers. Yes, they need to thin out the unions- but has Mulally earned his compensation. Not yet, in my eyes.

Chrysler is in such bad shape it can only muster a $4.5 billion offer from Kerkorian.

Such is the sad state of the US automobile industry sector.


Well, just get rid of your bigger engine offerings V8s etc. and also the big, heavy vehicles and you could save many percentages instantly. People are getting smarter. Apparently, GM is not. They expect people to buy their heavy and inefficient cars for ever.


Jeeze, what a jerk. Pissing into the wind.


Solution is easy. Buy a prius. They start at 22k.


this guy gets a bonus ? what sort of sick world do these people live in !


Dear GM,

Will you please just take a gun and blow out your brains already? Let the true innovators innovate.


It is time to give Lutz the Roger Smith treatment -- double his retirement package to reward him for such fine leadership -- and lay off all the workers.

Harvey D.

We, the buyers, are sending a hard message to GM-Ford-Chrysler by not buying their gas guzzlers.

If Big-3 sales go down another 5% to 10% a month and the Small-3 (Toyota & Honda & Nissan) go up at the same scale, it won't be long before the stock holders react and high paid managers are thrown out.

Otherwise, the Small-3 may become the Big-3 sooner than we think.


It seems to me that the big issues relative to the cost of compliance is whether new technology like "the camless engine" and the "homogeneous charge compression ignition engine" are satisfactorily developed within the time constraints of the law.
In the case of the battery for a plug in hybrid, the issue is whether a battery of sufficient capacity for 20 to 40 mile battery only range and 150,000 mile durability can be developed and sold at a low enough price to allow payback in terms of energy costs saved within that same 150,000 miles.


I sort of find this post hard to believe , I have read it time and time again
can this man really be this stupid ! or is just some clever confidence trick
Here in europe we can buy buckets full of sub compacts each retailing
at around 12 to 13000 dollars and all capable of returning 45mpg most
are well made, safe and comfortable , why is it all so different in GM land !



How many of those 45mpg cars are diesels that would not meet California and EPA NOx and particular emissions regulations?

We have traded efficiency for cleaner air, at the cost of more CO2 emissions. If CA and the EPA would relax the NOx regs a little bit, we'd have a flood of much more efficient cars and SUVs on the road.


The answers are out there!

People do want more efficient cars (see the Volt vote)

The technology is already here and being used by GM in other parts of the world (see and

The market is already moving in this direction (see

Oil is not coming down in price (see for the next 2 years and

What the hell is GM waiting for, I desperately want the US to have a viable and vibrant auto industry, but please, what has to happen for GM to take notice?



Always the doomsday scenario, so that when things actually do pan out (ie Volt), he'll look like a hero. On the other hand, if he actually believes increasing fuel economy will increase cost $5-6 grand, GM will be insolvent by 2008. Idiotic statement.


Fiat panda petrol , fiat punto petrol , polo petrol , skoda fabia petrol , Yaris,
honda jazz , even Gm make one in europe the opel corsa , Seat make the arosa ,
smart 4 two and 4 four , the list is endless , even the new golf 1.4 petrol returns
more than 40mpg .
The problem is that in America your manufacturers have got you all over
a barrel , thats an oil barrel of course !

Bob Bastard

"fuel economy of 4% per year could add $5,000 to $6,000 to a vehicle’s cost." That's one way of looking at it. Another view is that a $10,000 minicar costs 20% the price of a $50K suburban, while returning a fuel usage approximately inversely proportional to the price of the respective vehicles. Of course the profit margin is not going to be nearly as fat on a minicar as it is for putting navigation, a leather interior, and air ride suspension on a truck and calling it a "Luxury SUV." This whining might be a little easier to stomach if it were not for the fact that their cash cows are huge, inefficient SUVs, and as Patrick noted earlier, they are increasing the torque and HP at a rate higher than the mandated 4% fuel economy increase. I would love to see GM change its ways and start selling appealing, fuel efficient cars in the North America (like they do in other parts of the world), but talk like this makes me doubtful that it will ever happen.


Lutz said wider use of E85, the 85% ethanol fuel blend, would accomplish a far greater reduction in gasoline consumption and reliance on foreign oil than any fuel economy increase.

Could GM take another survey...of how much(K)Lutz makes the planets brains hurt?


If GM makes no changes to their auto mix and continues to emphasize monsters on the high end in terms of size, weight, and performance, and focuses solely on making those offerings with improved mileage at 4% per year, then, yeh, that will cost a bundle.

But GM knows that a 4% per year increase will require them to concentrate more on the low end in terms of size, weight, and performance. GM knows it cannot compete and win on that end of the automobile spectrum; therefore requirements for increase mileage may very well mean a significantly decreased market share and the dominance of Toyota, Honda, and others.

On the other hand, consumers could demand a change in the market right now by voting with their dollars. They choose not to and will only respond if and when their is an increase in gas prices (through taxation or not) of at least 100%, maybe more.

But do not the auto companies have some influence over their own markets? Or is all that advertising just a monstrous waste of money?

Advertising of cigarettes was banned because of their impact on human health. Advertising of gas guzzling autos, especially monster trucks and monster SUVs should be banned because of their impact on both human and planetary health.

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