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Honda Takes Up Case in U.S. for Green Energy
DANNY HAKIM . NY Times . 12 jun 2002

DETROIT, June 11 When it comes to fuel economy and the environment, there is Honda and there is the rest of the auto industry.

The difference has come into sharp relief as battles rage over how to curb the nation's swelling appetite for oil.

Honda is the only major automaker that has not joined the Alliance of Automobile Manufacturers, the industry trade group that has led the fight against tougher fuel and emissions standards.

Earlier this year, Honda was the only big automaker that did not back an industry advertising campaign that helped defeat a Senate proposal to raise gasoline mileage standards for the first time since the 1980's. Honda is also not taking part in an industry campaign against a California bill to reduce greenhouse gas emissions.

In a stand that amounts to heresy in much of the industry, Honda has told federal regulators that most sport utility vehicles, pickup trucks and minivans should meet the much higher fuel standards required of passenger cars.

And the company, based in Japan and ranked fifth in sales in the United States, has led the industry in the development of fuel-saving technologies.

"They've sensed there's a market allure to being green, and they've worked at it," said Peter Pestillo, a former vice chairman of Ford and now chief executive of the auto supply giant Visteon.

General Motors, Ford and Chrysler say their profitability depends largely on selling sport utility vehicles and pickup trucks because they lose money on the cars they sell. By contrast, Honda is making money in the United States and elsewhere selling mostly passenger cars. Indeed, the company's profit was four times that of G.M., currently the most successful of the Big Three, even though its worldwide revenue was less than a third of G.M.'s last year.

The average new vehicle sold by Honda in the 2000 model year got nearly 30 miles a gallon, about 6 miles more than the average American-made automobile and more than any other automaker.

Until recently, Ford and Toyota were favorites of environmental groups. Ford's chief executive, William Clay Ford Jr., often spoke out on issues like global warming; Toyota advanced fuel-efficient technologies. But watching the two companies support the industry's latest lobbying campaigns, which have gone so far as to portray the sport utility vehicle as a species endangered by regulatory meddling, has embittered some groups.

"The only hope I can see for a future with cleaner cars is Honda," said Daniel F. Becker, director of global warming policy for the Sierra Club and an outspoken critic of the auto industry.

"They have repeatedly led the way on technology," he said. "They started the race for hybrids. They put on vehicles fuel-saving technologies that Detroit only keeps on the shelves."

Honda recognizes it has disagreements with other producers. "We cannot agree with the alliance on several issues," said Tom Elliot, an executive vice president of American Honda. "It could be CAFE," he said, using official shorthand for the corporate average fuel economy standards required by the federal government. "It could be emissions; it could be trade. There are several issues."

Koichi Amemiya, chief executive of Honda's American operations, said in a recent interview that "business and some social obligation have to be equally applied to the whole company."

Despite its origin as a maker of motorcycles, Honda does not embrace rebellion, and its executives play down their differences with competitors. "We don't get on the bandstand about it," Mr. Elliot said.

But a bandstand is hardly needed. Consider automakers' responses last month to a request from the National Highway Traffic Safety Administration for feedback on ways to improve fuel economy. A contentious issue was the regulatory definition of a truck. When fuel economy standards were introduced in the 70's, a category called light trucks, encompassing pickups, was set up for work vehicles used on farms and construction sites. Light trucks are permitted to burn 33 percent more gasoline, on average, than passenger cars.

But the light truck category includes the since highly popular sport utility vehicles and minivans. The change has led to a 7 percent increase in the consumption of oil used for gasoline, even after significant advances in fuel-saving technologies, according to an estimate by the Union of Concerned Scientists, an environmental advocacy group, among other things.

"The functional distinction between cars and trucks (cars for personal use and trucks for work cargo use) has broken down," the safety agency said in a statement.

But the idea of coming up with one standard for cars and trucks is anathema to many automakers. G.M., in a 336-page report, argued that federal fuel standards had not led to improvements in national energy security, gasoline consumption, climate change or air pollution, and added that imposing significantly higher standards for trucks would be a great disadvantage for the Big Three.

Honda said it would support a combined standard, even though the company sells a popular minivan, the Odyssey, and two small sport utilities, and is adding two larger sport utility models this year.

"There has been a fiction about what a light truck is that has evolved," said Edward Cohen, Honda's top Washington lobbyist. "No one intentionally created the fiction, but the definition that was created many years ago no longer fits."

Honda can maintain enviable profits from smaller vehicles for several reasons. First, it ranks higher in quality than other American-made cars in surveys of buyers, meaning that the buyers are willing to pay a little more. Second, it costs Honda less to produce a car because of manufacturing efficiencies, the company's nonunion status and favorable currency exchange rates.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, argues that Honda would not be at a disadvantage if fuel standards were tightened, while companies selling a higher percentage of light trucks would be. Light trucks account for about a quarter of Honda's American sales. The Big Three each now sell more light trucks than passenger cars in thias country.

Part of Honda's stance also has to do with an inventive corporate culture. Its top executive, Hiroyuki Yoshino, is an engineer who helped develop an engine for the Civic in the 1970's that could meet new emissions standards without a catalytic converter. More recently, Honda has embarked on such eclectic enterprises as building a humanlike robot that was so lifelike that the company consulted the Vatican for ethical guidance in the late 90's.

"Honda is a superb technical company, they have very strong principles, and they're very honest," said James Olson, the top lobbyist for Toyota. "They've always been a maverick."

But, he added, "Somebody in the Japanese industry has to get involved with American politics and get their hands dirty."

"Toyota and Nissan made the decision to get involved," he said, referring to the recent debate over a Senate proposal to raise fuel economy standards by 50 percent over 12 years. "While Honda stood on the sidelines and while the environmentalists were yelling out there about the dirty automakers, we worked with the Senate and the House."

"I have great respect for Honda," Mr. Olson added, "but I think they're wrong in this case."

Though the Senate voted down the proposal, it did support a measure backed by the industry to direct the traffic safety agency to take some action. But environmental groups think that the agency will do little under the Bush administration. Andrew H. Card Jr., G.M.'s former top lobbyist, is President Bush's chief of staff.

Toyota presents a green image in advertisements and is the only company besides Honda to sell cars that use hybrid engines powered by gasoline and electricity. But to some, the company is increasingly looking and sounding like a full-line manufacturer, in the mold of G.M., Ford or Chrysler.

"It was surprising in some ways that Toyota's lobbying tactics and statements did seem to be stronger this year and a little closer to the alliance's messages," said David Friedman, an engineer and analyst with the Union of Concerned Scientists. "That was disappointing."

But Honda is hardly a stalwart ally of such groups. In reality, the company has navigated a third way between industry and environmental groups. It did not support the failed Senate proposal, saying it was too ambitious. Nor does Honda support the California bill to cut greenhouse gas emissions, preferring a federal policy to state-by-state variation in regulations.

But Honda did help the cause of environmental groups during the Senate debate by financing research that showed higher mileage requirements would not necessarily lead to more highway deaths.

The automobile alliance, supported by the National Academy of Sciences, has argued that fuel economy standards spurred lighter-weight cars, making them less safe and leading to thousands of additional deaths.

Honda's research found that previous data was years out of date and did not reflect that many mileage gains are now achieved through improved technology as opposed to making cars lighter.

Mr. Ford, who once spoke frequently on issues like global warming, has been largely silent since becoming chief of the struggling company last October.

"We were against CAFE," he said at a news conference in May. "I know that disappointed some people, but we've always been against CAFE."

"Nothing we've said on the environmental agenda has changed," Mr. Ford added. The company has promised to introduce a hybrid sport utility next year. Still, environmental groups bitterly criticized Mr. Ford after the Senate vote, as they criticized most automakers.

"It was discouraging to see them use all the old `business versus the environment' arguments on Capitol Hill, instead of seizing the moment to work for what's possible," said Debra Hall, the accountability director for the Coalition for Environmentally Responsible Economies, a coalition of environmental groups and corporations, including G.M. and Ford.

"Honda was the only one to break from the pack with a focus on what can be done," she added. "We hope the others will follow their lead."