From: Reuters
Published November 21, 2007 07:52 PM

Detroit automakers see green at end of rainbow

By Peter Bohan

DETROIT (Reuters) - Detroit's auto industry, which has given the world the "muscle car" and "gas guzzler," may finally be seeing "green."

Top auto executives, investors and industry analysts sang the same tune at this week's Reuters Auto Summit: newfound hope for competing in the market for fuel-efficient, environmentally friendly cars and trucks.

Green, it seems, is good.

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"I think whether global warming is science fact or not no longer matters," said billionaire investor Wilbur Ross.

"It's going to be treated as if it were science fact, and it's clear there will be lots of pressure and lots of encouragement toward green activity," said Ross, who has bought several big auto supply companies in recent years.

General Motors Corp, at risk of being displaced by Toyota Motor Corp as the world's top seller of vehicles, has earned much scorn -- and suffered a steady erosion of its once-dominant market share -- due to gas-guzzling creations like the Hummer, jumbo sport utility vehicles and giant trucks.

"We somehow ... let Toyota get ahead of us in terms of environmental technology because they did the Prius hybrid, and we elected not to do that kind of hybrid," GM's vice chairman and product development chief Robert Lutz told the Reuters Summit.

"We have since realized that letting Toyota gain that mantle of green respectability and technology leadership has really cost us dearly in the marketplace."

Lutz, a 40-year veteran of Detroit and an outspoken champion of American technology, bristled at the thought. He said GM will introduce 12 new hybrids over the next 3 years.

"It has gotten to the point where people buy Toyota because it is seen as the sane and responsible thing to do because, after all, Toyota is the company that brought you the Prius."

GM plans to launch its mass-market, plug-in electric car, the Chevrolet Volt, by the end of 2010, despite skepticism within GM about meeting that deadline. Revolutionary lithium ion battery technology is only one daunting challenge.

"People are biting their nails, but those of us in a leadership position have said it has to be done," said Lutz.

"We have to re-establish GM's leadership, and the Volt is, frankly, an effort to leapfrog anything that is done by any other competitor," Lutz said.

If federal regulators will count the Volt's 40-mile battery-only range in calculating its fuel-efficiency, Lutz said the car would achieve "off-the-chart fuel economy ratings" that could be "way over 100 miles-per-gallon."

That, in turn, could help GM meet tough new fleetwide fuel economy ratings expected to clear Congress, he said. The Volt could represent "the only financially feasible way to achieve these numbers that Congress is talking about," he said.

GM is the only automaker to have provided a timeline on such a car, even though other companies, such as Ford Motor Co and Toyota, are working on similar technology.

Ford global product chief Derrick Kuzak said that "green issues," led by fuel economy, were No. 1 on his to-do list.

"It's at the top of our customers' list, given the price of oil, the price of gasoline and the increasing environmental sensitivity," Kuzak said.

But Ford, which lost $12.6 billion in 2006, has no plans for a new iconic vehicle like the Volt. Kuzak said Ford's focus is on new direct-inject gasoline turbo technology, based on diesel engines, that offered up to 25 percent gains in fuel economy.

Stefan Jacoby, chief executive of Volkswagen AG's U.S. operations, agreed that you can have "much bigger efforts by doing things simple: smaller cars, right away, and of course new engine generations," he said. "Do the first things first."

That includes plans to boost VW's popular Jetta diesel.

"It's a very easy way to save fuel and do something for the environment," he said. "American consumers are as environmentally concerned as everybody else in the world. But they really did not get the right offers."

Parts suppliers -- from tiremakers to makers of lightweight alloys to power train, battery and emissions makers -- have all seen the green light at the end of Detroit's tunnel.

Gregg Sherrill, CEO of Tenneco Inc, a maker of emission control devices, said issues of consumer confidence about global warming were becoming "enormous."

"If you look at the concern over greenhouse gases, which is primarily CO2, the only way to really address that is through better fuel economy," he said, citing tougher regulations and legal rulings now appearing regularly on emission controls.

"I have no idea what's coming, other than to say I don't believe for one minute that in any country in the world there is a lessening of environmental concern going on over the next several years," Sherrill said.

(For summit blog: http://summitnotebook.reuters.com/)

(Additional reporting by Jui Chakravorty and David Bailey; Editing by Jeffrey Benkoe)

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