Obama does victory lap for car industry that looks different from what he hoped

Reuters News
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Posted: Jan 20, 2016 3:53 PM

By Jeff Mason

DETROIT (Reuters) - President Barack Obama, facing Republican criticism over the state of the economy, did a Detroit victory lap on Wednesday to showcase the auto companies his administration helped save, but the industry has not turned out the way he hoped in 2009.

Obama points repeatedly to his bailout of General Motors and Chrysler during the U.S. recession as examples of tough decisions he made that paid off.

But car companies are still churning out gas-guzzling sport utility vehicles to meet consumer demand, going against Obama's hope that higher fuel-economy models would win the day.

Sales of SUVs rose 16 percent in 2015, while car sales fell 2 percent. Although new SUVs are more efficient than prior models, they still burn significantly more gasoline than cars.

About 59 percent of U.S. vehicle sales last year were sport utility vehicles, pickup trucks or other larger vehicles, up from 54 percent in 2014.

Low gas prices have boosted SUV sales at the expense of small cars. A Ford Motor Co plant in Michigan that Obama visited in January 2015 is ending production of small cars in 2018, the company announced in July, and is expected to start building SUVs to help meet soaring demand.

During a stop at the North American International Auto Show, Obama sought to give a push to electric vehicles. He sat in the driver's seat of a 2017 Chevrolet Bolt EV, an all-electric car the White House said had an estimated range of 200 miles (320 km) on a single charge. The president declared it a nice-looking car.

Electric vehicle sales fell last year by 6 percent to 115,000, and the Obama administration acknowledged it would not meet its goal of getting 1 million plug-in vehicles on U.S. roads by 2015. To date, about 400,000 electric vehicles have been sold.

The White House noted the auto industry was on track to meet targets to double fuel efficiency and cut emissions by half by 2025.

"So vehicle manufacturers are beating their standards for the third year in a row now," White House spokesman Eric Schultz told reporters on Air Force One on the way to Michigan.

Republican presidential candidates have criticized Obama's stewardship of the economy.

Obama's visit to Detroit did not include a stop in nearby Flint, which is in the throes of a water contamination crisis that has forced the state's Republican governor to apologize amid calls for his resignation.

(Additional reporting by David Shepardson in Washington; Editing by Peter Cooney)