SEPTEMBER 26, 2005

Crash Course
How U.S. Shifted Gears to Find
Small Cars Can Be Safe, Too

By Karen Lundegaard
Staff Reporter of The Wall Street Journal

For decades, whenever the federal government leaned on auto makers to improve fuel efficiency, the industry had a ready response: Research showed that lighter, more fuel-efficient vehicles weren't as safe as their heavier, gas-guzzling cousins. Even shedding as little as 100 pounds could lead to a serious increase in traffic fatalities.

The result has been a virtual standstill in fuel-economy improvements for cars, trucks and sport-utility vehicles over the past 20 years.

Now a wave of new studies and technologies -- strong, light materials, better airbags and smarter designs -- are beginning to break the logjam. The upshot: A big shift in government thinking that is paving the way for regulators to revamp fuel-economy rules for SUVs and pickup trucks for the first time in three decades.

The shift could have big implications for the environment and for consumers, who were beginning to clamor for more fuel-efficient vehicles even before Hurricane Katrina pushed gasoline prices at the pump above $3 a gallon. But it could significantly complicate things for the already financially strapped auto industry.

Over the past 15 years, when gasoline was generally cheap, the industry came to rely on heavy, fuel-thirsty models such as SUVs and pickup trucks for the bulk of its profits. Much of auto makers' fixed costs, such as retiree expenses, labor and benefits, are similar from vehicle to vehicle. So the bigger and pricier the car or truck, the more profit it generates. To protect this profit stream, the industry has long fought calls for tougher fuel-economy rules, citing safety, consumers' preference for bigger cars and lost jobs at truck factories.

Fuel-economy policies historically have kept "the manufacturer from selling the vehicle to the customer that the customer wants to buy," says General Motors Corp. spokesman Chris Preuss. We have to do "unnatural acts in the marketplace to subsidize more fuel-efficient vehicles," while volume of profitable larger vehicles is constrained, he says. "Eventually the economics catch up with you."

Spurring the change in government thinking is new research, including a study that argued that the quality of a car can play as much of a role in safety as its weight. To measure quality, the study used resale values, which tend to correlate with better design and more safety features. Honda Motor Co. also broke from the industry, commissioning studies that found reducing a vehicle's weight while maintaining its size actually saves lives.

"There's now a credible opposing view to what used to be the only view," says David L. Greene, a research fellow at Oak Ridge National Laboratory, a Department of Energy research lab. A paper he co-authored in March, looking at car-crash fatality rates from 1966 to 2002, found no statistically significant relationship between fuel economy and increased traffic fatalities. Mr. Greene says that previous research that did find a correlation studied only the immediate years after fuel-economy reform when weight drops were most significant. But studied over a longer period, that correlation disappears, he says.

For years, the accepted wisdom in the car industry held that, all things being equal, heavier vehicles are always safer when two vehicles crash. New studies highlight how other factors -- including a car's size, body design and advanced technology -- can do much to counteract the weight issue.

The newer studies also have homed in on the downside of weight: While a heavy vehicle protects its occupants in an accident, it inflicts more damage to those it hits. That means reducing the weight of the biggest vehicles could yield dividends in both fuel consumption and safety.

All of this has contributed to a rethinking of the fuel-economy regulations from the National Highway Traffic Safety Administration. Last month, NHTSA crafted new "Corporate Average Fuel Economy" rules, or CAFE, for light trucks that aim to balance safety and fuel efficiency. The old fuel economy rules are based on an auto maker's fleet average for cars or trucks sold, encouraging car makers to sell lots of small fuel-efficient vehicles at sometimes unprofitable prices, so they could keep selling their more profitable gas guzzlers.

The new truck and SUV rules set up six different categories of vehicle by size, forcing auto makers to improve their fuel efficiency within each category. Backed up by the new research, regulators believe the rules will yield better gas mileage without compromising safety.

The debate over safety and fuel economy stretches back to 1975, when Congress passed fuel-economy laws following the 1973 Arab oil embargo. Under the laws, auto makers were required to double the fuel economy of cars to 27.5 miles per gallon between 1974 and 1985. Trucks, largely work vehicles at the time, had a less strict standard, which rose to 20.7 mpg by 1996, where it stayed for years.

To comply, auto makers put their vehicles on a diet. Between 1975 and 1980, cars shed 1,000 pounds, sliding to an average weight of 3,000 pounds. Trucks also dropped from an average 4,200 pounds in 1979 to 3,700 pounds in the mid-1980s.

The weight loss triggered a slew of studies by the government, academics and the industry, which mostly found that safety was being compromised. The research provided ammunition as the auto industry beat back several new efforts by Congress to raise fuel-efficiency targets in the early 1990s. Industry-sponsored television ads during a 1991 congressional push to raise standards showed a government crash test in which a 2,300-pound car that got 41 mpg was crushed by a 4,000-pound car that got 23 mpg.

In 1992, the National Academies, a nonprofit government adviser on issues of science, recommended significant fuel-economy increases, including a 20% jump for large pickups to at least 23 mpg, and a 28% rise for large cars to a minimum 30 mpg by 2006. Still it concluded that making vehicles lighter would carry a cost in safety and suggested a comprehensive study on vehicle size, weight and safety.

Later, NHTSA released a groundbreaking study from mathematician Charles Kahane, a career researcher at the agency whose work demonstrated that airbags can kill young children. His 1997 study concluded that a 100-pound weight reduction in passenger cars would cause 302 more fatalities a year. The figure would be slightly offset if heavier pickups, SUVs and vans were also downsized by 100 pounds.

The study came as consumers were buying Ford Explorers and other SUVs in record numbers and the weight of the average car gradually was creeping higher. The surge in gas-guzzling vehicles prompted environmentalists to call for tougher fuel-economy standards.

Detroit's Big Three auto makers, which dominated the SUV market, recognized a big threat. In 1996, they persuaded Congress to begin freezing NHTSA's funding to study CAFE, effectively preventing the agency from changing the rules for several years. But with Congressional pressure rising to strengthen fuel economy, auto makers agreed in 2001 to drop that freeze and have the National Academies re-examine whether to ratchet up the standard.

In January 2002, the academy released a report that further fueled the debate. It found auto makers could use advanced technologies including more efficient engines and lightweight materials to improve the fuel economy of big vehicles such as SUVs by more than 30% over a decade or so. But it also acknowledged Mr. Kahane's research, calculating fuel-economy increases had caused between 1,300 and 2,600 more deaths in 1993.

The report also concluded that the fuel-economy system was easy for auto makers to manipulate. Because the system was based on an auto maker's average fuel economy of all cars and trucks sold each year, car makers did little to rein in their gas guzzlers. Instead, they cranked out more fuel-efficient small vehicles so they could keep making plenty of the more-profitable fuel hogs. This hurt safety without improving energy conservation. The academy recommended overhauling the system.

A month after the academy's report appeared, NHTSA proposed the first light-truck fuel-economy increase in almost a decade. A 7% bump to 22.2 mpg ultimately passed. Auto makers were asked to phase in the increase over three years. Many auto companies protested, saying more people would be injured if they lightened their trucks.

Honda, which mostly produces smaller and lighter vehicles, was tired of the argument that undercut its lineup. So in 2002 the Japanese auto maker, which traditionally stood on the sidelines while the rest of the industry waged political fights on Capitol Hill, began to spread the notion that small, fuel-efficient cars can be safe. Its case in point: the 2001 Civic Coupe. When the car was redesigned in the late 1990s, engineers built a shorter engine and moved up the gear box to create more space for the front end to crumple and absorb a collision's impact, among other measures.

The two-door Civic became one of the first cars to get the government's top five-star rating in four different crash-test scores in late 2000. The only other car at the time with the same rating was Volvo's S80, which weighed 1,000 pounds more than the Civic's 2,500 pounds and cost up to three times as much as the Civic's starting $13,500 price.

Honda also hired Dynamic Research Inc., an auto and aerospace consulting firm in Torrance, Calif., to update Mr. Kahane's study using newer vehicles. In 2002, DRI concluded a 100-pound drop in an average newer vehicle had a "very small and not statistically significant" effect on the number of traffic deaths. (A 100-pound drop in weight improves fuel efficiency on average by 1% to 2%.)

The following year, Mr. Kahane released an update of his own research that held firm on his basic thesis that even small weight drops caused more fatalities. But he noted that safety could be improved by reducing the weight of the heaviest SUVs and pickups -- those weighing more than 5,085 pounds -- because they would do less damage to other vehicles.

Early on in NHTSA's quest to revamp its fuel-efficiency rules, it continued to view the safety and fuel-efficiency issue in terms of weight, drawing up a proposal that would categorize trucks and SUVs by how much they tip the scale. But some environmentalists and others feared a weight-based system would encourage auto makers to make heavy vehicles even heavier, in order to move the vehicles into a more lenient category. And a system more lenient to heavy vehicles would also discourage auto makers from using lightweight materials, such as aluminum, high-strength steel and plastics, that have shown great promise for both improving safety and fuel economy.

Other research was also finding that size and design can trump the long-held assumption that the heavier car always wins. Earlier this year, Thomas Wenzel of Lawrence Berkeley National Laboratory and Marc Ross of the University of Michigan published research that said light cars aren't necessarily less safe than heavy ones, noting the car's quality -- as measured by the Blue Book value -- may be more crucial than its weight. Presumably, cars with higher book values have more safety features and better designs. Many European researchers have also played down the role of weight, saying a vehicle's degree of stiffness was more critical: It should crumple to absorb the impact of a crash, but not so much that it kills the driver.

Honda's researcher also continued its studies, trying to go beyond Mr. Kahane's work to separate the safety impacts of size and weight. DRI found that making a car lighter while maintaining size improves safety. But making cars smaller while keeping weight the same increases fatalities. Honda officially submitted its findings to NHTSA and had some 10 meetings with government officials working on CAFE reform.

In response to DRI and others, Mr. Kahane, whose work had become a prime talking point for the auto industry in fighting tougher-fuel economy laws, clarified in filings that his work isn't all about weight, and that weight and size are closely correlated in terms of safety.

Last month, NHTSA proposed the new fuel-economy rules for trucks and SUVs based on a vehicle's size -- defined by the area of the rectangle formed by the vehicle's wheels. Instead of one overall target for the fleet, auto makers would be compelled to improve the fuel economy of all trucks, including the largest. The new rules recognize that the government has moved away from the theory that a loss of weight equals a loss of safety. The agency will go through a 90-day period of public comment on the rules. It expects to approve the final version in April.

Stephen Kratzke, NHTSA's associate administrator for rulemaking, says a size-based system should promote use of high-strength, low-weight materials that could improve fuel economy without affecting safety, "exactly what the fuel economy programs are trying to encourage."

--Jeffrey Ball contributed to this article