Thursday, June 01, 2006

GM takes flack for cheap gas incentive

Thursday, June 01, 2006
GM takes flack for cheap gas incentive

Critics say incentive keeps buyers hooked on gas hogs; automaker calls attacks wrongheaded and unfair.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- General Motors Corp.'s offer to defray the costs of gas for some buyers of new SUVs and sedans is drawing heavy fire from environmentalists and influential pundits.

Under the automaker's "fuel price protection program," GM is reimbursing buyers in Florida and California for gas costs above $1.99 a gallon for one year.

The program, which runs through July 5, includes gas-thirsty SUVs such as the Chevy Tahoe and Suburban, GMC Yukon, Hummer H2 and H3, and Cadillac SRX.

While GM has stepped up its promotion of alternative fuels, critics say the new gas program is a cynical attempt to keep selling gas hogs without regard to the environment and America's dependence on foreign oils.

"It says a lot about GM and their dire financial straits that they are so desperate to sell the gas guzzlers that no one wants, that they are paying for the gas to drive them home," said Dan Becker, director of the Sierra Club's Global Warming Program. "When did you ever hear about a junkie giving up his subsidized fix?"

Influential New York Times columnist Tom Friedman -- author of the best-selling book "The World is Flat" -- took on GM in a sharply worded column Wednesday.

"Is there a company more dangerous to America's future than General Motors? Surely, the sooner this company gets taken over by Toyota, the better this country will be," Friedman wrote, comparing GM to "a crack dealer looking to keep his addicts on a tight leash" by offering the fuel program.

GM Vice Chairman Bob Lutz, who oversees the automaker's product development, said in an e-mail that Friedman "is so 'over the top' that it borders on psychosis."

Lutz said his hope "is that the majority of Americans, not being extreme liberals, and harboring a deep-seated distrust toward the media, will see his piece for what it is: the product of an unusual, but not altogether well, mind."

GM spokeswoman Deborah Silverman said the fuel-savings program has been successful, based on reports from dealers. She said there are no plans to expand the incentive program nationally.

Boston Globe columnist Derrick Z. Jackson also criticized the program last week in a column titled "Leveraging lunacy at GM."

"Americans burn up cash in inefficient vehicles. Petroleum companies rake in record profits. The auto industry buys off Congress to kill increases in fuel economy rather than retool," Jackson wrote.

Detroit automakers support "reasonable" increases in fuel economy standards and haven't opposed the Bush adminstration's request to seek authority to increase fuel economy standards for passenger cars, which has remained at 27.5 miles per gallon for two decades.

Environmentalists insist the Bush proposal is a sham and Congress should mandate a specific miles-per-gallon requirement to guarantee fuel savings.

A bill to grant the authority passed a House committee May 11 but stalled before reaching the floor. It could come up this month for a vote.

GM officials defend the company's large SUVs, and point out that the redesigned 2007 Chevy Tahoe is more fuel efficient than a Toyota Sequoia. The automaker has sought to burnish its environmental credentials by increasing its commitment to flex-fuel vehicles, moving to commercialize hydrogen fuel cells, and offering the most U.S. models that average 30 miles per gallon or more.

"To say GM is like a crack dealer trying to get people to buy gas guzzlers is just patently ridiculous," GM spokesman Brian Akre said. "We sell a full range of vehicles, just like Toyota and just like the other large auto companies."

Akre questioned how an incentive -- less than some competitors' programs -- would "addict" customers.

"Let's be honest, a $1,000 gas card is not going to convince someone who was going to buy a $15,000 small car to buy a $35,000 Chevy Tahoe," Akre said.

One environmentalist says GM's latest marketing effort shows it made too large a bet on SUVs, rather than hybrids or more fuel-efficient vehicles.

"It's a gimmick, and if GM would focus more on making fuel-efficient cars and trucks, they wouldn't need such gimmicks," said Eric Haxthausen, an economist at Environmental Defense, a group that has been critical of large SUVs.

David Cole, head of the Center for Automotive Research in Ann Arbor, said GM has to offer incentives to be competitive.

"The liberal philosophy is we ought to not be buying GM SUVs and instead buying Toyota Priuses. That's their perfect world but it's not the world in which we live."

You can reach David Shepardson at (202) 662 - 8735 or


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