[sustran] WBCSD - IHT.com Article: Carmakers feel pinch of pollution

[ecoplan.adsl at wanadoo.fr]

As we prepare to dig into the next and most important stage of our
knowledge building program using the WBCSD report as the frame for our
discussions, I think it is a good idea to keep in mind the pressures
that the automotive industry is under as it tries to figure out what to
do next with this (and other) ever tightening loop around their necks.
That's our challenge really, isn't it? To understand their position, and
still to help them deal with these critical issues.  If we just lob
bricks at them, it won't accomplish anything for sure. Ironically
enough, they need help in putting all this into perspective - strategic
perspective in fact - and here is maybe where we can be of help.
Without of course  giving away the sustainability store.  Eric



 

Subject: IHT.com Article: Carmakers feel pinch of pollution

 

A new report says that GM and Ford stand to lose more, financially, than
any other automakers in complying with fuel efficiency regulations.
http://www.iht.com/articles/531299.html 

 


Carmakers feel pinch of pollution


Danny Hakim NYT 
Tuesday, July 27, 2004

 <http://www.iht.com/ihtsearch.php?key=DETROIT> DETROIT One does not
often hear financial analysts talk about climate change, but this month
John Casesa, an analyst at Merrill Lynch, organized a teleconference to
address a troubling question for Detroit's automakers: As regulators
around the world move to curb emissions of heat-trapping gases from cars
and improve fuel efficiency, what will happen if Wall Street adds up the
costs?

The most likely answer will not make General Motors and Ford Motor very
happy. Casesa's call included a presentation by the World Resources
Institute, an environmental policy group in Washington that recently
issued a report on the subject with Sustainable Asset Management, an
investment group based in Zurich.

The report says that GM and Ford stand to lose more, financially, than
any other automakers in complying with regulations that the groups
expect the United States, Europe and Japan to adopt over the next
decade.

Ford would have to spend $403 more on each vehicle to meet the expected
new standards, the report estimates, and GM would have to spend $377
more. By contrast, the added cost to Honda Motor would be just $24.

Car for car, BMW would have to spend more than Ford or GM, $649 on each
vehicle, the report found, but because its prices are higher, it would
have less difficulty absorbing the cost.

Perhaps the most troubling finding for GM and Ford, the last two major
U.S.-based automakers, is that some foreign competitors, particularly
Toyota Motor, may actually be helped by tougher regulations because they
have already invested much more in fuel-efficiency technologies, like
hybrid gas-electric engine systems, that could generate new profit.

Regulations related to fuel economy and gases believed to cause global
warming are "going to be one of the key drivers that determines
competitiveness in the industry over the next decade and beyond," said
Duncan Austin, who until recently was a senior economist at the World
Resources Institute.

The European Union and Japan are phasing in curbs on automotive
emissions of heat-trapping gases, which rise and fall almost in lock
step with fuel use. The Bush administration has moved away from an
international agreement, known as the Kyoto Protocol, to cap such
emissions, but California has drafted its own plan, and several
northeastern states may follow.

"As a U.S. auto analyst, I'm very concerned about the risk side of the
equation," Casesa of Merrill Lynch said. "For the domestic auto
companies, we've had an accommodating energy policy, but there are new
issues like climate change, and there are new geopolitical issues,
military issues, that relate to our energy policy."

The result could be tougher U.S. fuel-economy standards, Casesa said.

That would be painful for Ford and GM because they rely heavily on sales
of light-duty vehicles that are the least efficient in fuel use: large
sport utility vehicles and pickup trucks.

Niki Rosinski, a financial analyst who collaborated on the report and
worked at Sustainable Asset Management until recently, pointed to what
he called the "carbon intensity" of Ford's profit, meaning the company's
reliance on vehicles that consume the most fuel and emit the most carbon
dioxide and other gases that some scientists say cause climate change.

"Sixty percent of Ford's sales globally come from the North American
market, and in the North American market, 60 percent of their sales come
from light trucks, which are around 80 percent of profits of their North
American operations," Rosinski said.

The institute's report forecasts that because of new regulations Ford's
profit will be 10 percent lower than would otherwise be expected from
now to 2015 and that GM's profit will be 7 percent lower.

The New York Times 



IHTCopyright C 2004 The International Herald Tribune | www.iht.com 

 

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