Detroit’s automakers are being unfairly raked over the coals in Washington. The supporters of raising fuel economy regulations to levels that would cost the Big Three $85 billion suggest Detroit is struggling because our car companies have their heads in the sand on fuel economy.
Make no mistake, General Motors, Ford and Chrysler are not losing market share because they refuse to make fuel-efficient vehicles. The Big Three spend $16 billion a year on R&D, which is more than any other industry in America. There are thousands of smart and talented engineers in Michigan working to develop clean diesel and advanced hybrid technology and other solutions to reduce our dependence on Middle East oil. Chrysler just announced a $3 billion investment in new fuel efficiency technology and will begin selling hybrid versions of its Aspen and Durango SUVs. General Motors produces more vehicles that exceed 30 mpg than any other automaker in the world. GM’s top selling sedan, the Chevy Impala, averages 31 mpg on the highway. Toyota’s top selling sedan, the Camry, gets the same fuel economy. Honda’s top selling sedan, the Accord, averages 29 mpg. Detroit can match the Japanese on fuel economy. The reason our companies’ fleet averages are lower is related to the American dominance of the truck market. The domestic industry has 91 percent of the pickup truck market. This is the most profitable sector of the American auto industry and explains why Toyota is also opposed to the fuel economy mandates recently passed by the United States Senate.
Outside of legacy costs, the major reason Detroit is losing U.S. market share is Japan’s aggressive manipulation of its currency. Since 2001, Japan has spent more than $400 billion to misalign the yen to the dollar. According to The Auto Trade Policy Council, the weak yen provides a per vehicle subsidy of $4,000 to $15,000 to Japanese auto exports. The Detroit News’ covered this issue extensively last week.
The Japanese auto companies, Toyota in particular, have spent heavily on ads in Washington that tout their economic investments in America. Toyota now employs roughly 34,000 people in the United States. GM, Ford and Chrysler collectively employ nearly 400,000. The Big Three produce 7 out of every 10 cars made in the United States and purchase 80 percent of all the auto parts manufactured in our country.
The Japanese automakers will assemble 2.5 million vehicles in Japan this year to be exported to America. Each one of these exported vehicles comes into America with a sizeable yen subsidy attached to it. The Japanese automakers are formidable competitors, but they are foreign companies. They will never replace the economic footprint of the domestic auto industry. When they gain market share, America loses good paying auto jobs forever.
I have visited auto factories in my district and met with the GM workers who are making great cars and trucks like the Pontiac G-6 and Chevy Silverado. I know the American car companies can compete with anyone on quality. They shouldn’t have to do it with both arms tied behind their backs. If Washington is hell-bent on imposing dramatically higher CAFÉ standards on Detroit’s automakers, it should also pass legislation to challenge Japan on the unfair yen subsidies that are fueling sales of Japanese vehicles in America.