If President Obama has his way, the average vehicle sold in the U.S. will get 35.5 miles per gallon by 2016 -- adding about $1,300 to its cost. What's the benefit? He thinks it will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years -- equal to the U.S. imports from Saudi Arabia, Venezuela, Libya and Nigeria. And those more fuel efficient vehicles will cut carbon dioxide emissions by about one-third. Not only that, but there'll be 177 million fewer cars on the roads over the next 6.5 years.
This raises some interesting questions:
Are the mileage standards integral to his plan to auto industry turnaround?
No. The key to the turnaround plans is to cut these companies back to a profitable core. This means getting rid of unprofitable product lines and cutting back on excess production capacity and dealers. It also means writing new contracts with bondholders and unions.