New Vehicles to set Records

New vehicles are expected to set records for average gas mileage in 2007, driven by improved technology and demand for fuel-efficient vehicles, the government reported.

Vehicles from the 2007 model year are projected to average 26.4 miles per gallon overall, a gain of 1 mpg over the previous year and above the previous record of 26.2 mpg in 1987. The increases are attributed to higher demand for hybrids and more fuel-efficient vehicles with gas prices hovering around $3 for much of the year.

Sales of hybrid vehicles and small cars are expected to set new sales records this year despite a sluggish U.S. auto market. Sales of pickup trucks and SUVs have largely declined due to high gasoline prices and the slump in the homebuilding industry.

Honda Motor Co. (NYSE:HMC) was estimated to lead the way, averaging 39.9 mpg for its imported vehicles and 33.7 mpg for vehicles built in the United States. Toyota Motor Corp. (NYSE:TM) is second with 38.5 mpg for imported vehicles and 31.7 mpg for cars and trucks produced in North America.

David Friedman, a researcher with the Union of Concerned Scientists, called the estimates for Toyota discouraging. Toyota's domestic vehicles are projected to fall 3 mpg in 2007 and the Japanese company is the only large automaker expected to decline in truck fuel economy.

'At the same time Toyota's producing ads with hybrids driving through green fields, it's making less fuel-efficient vehicles,' Friedman said. Toyota spokesman Bill Kwong said the automaker did not have an immediate comment.

The data, based on a Transportation Department analysis of sales estimates released earlier this month, was first reported in Friday's editions of the Detroit Free Press. The projections will be updated once automakers and the National Highway Traffic Safety Administration receive sales data for 2007 vehicles.

The difference in mileage between continents comes from the different models that are produced at each location. Detroit-based automakers are all projected to make progress. General Motors Corp. (NYSE:GM) and Ford Motor Co. (NYSE:F PRS) (NYSE:F PRA) (NYSE:F) improved to 29.6 mpg and 28.8 mpg, respectively, in domestic production.

DaimlerChrysler AG (NYSE:DAI) also showed gains. The automaker, which sold an 80.1 percent stake in Chrysler -- now called Chrysler LLC -- to Cerberus Capital Management LP, climbed about 3 mpg to 28.6 mpg in its domestic production.

Nissan Motor Co.'s (NASDAQ:NSANY) domestically produced vehicles averaged 33.4 mpg while its imported vehicles were estimated at 25.9 mpg. Overall, passenger cars are expected to average 31 mpg, an increase of 1.2 mpg, while pickup trucks, sport utility vehicles and vans are expected to increase to 22.9 mpg, up 0.7 mpg from 2006.

Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, said the data reflected the industry's push to develop more fuel-efficient models, but much of the progress was dependent upon what consumers buy.

'While we're pleased that fuel economy has increased, we also are well aware that shifts in the marketplace could very easily negate those gains,' he said. In June, the Senate approved legislation requiring the auto industry to produce more fuel-efficient vehicles and negotiators in the House and Senate are expected to consider the upgrades.

Under the Senate bill, the industry would need to meet fuel economy requirements of 35 mpg by 2020, up from the current standards of 27.5 mpg for cars and 22.2 mpg for SUVs and pickup trucks. Automakers have pushed more modest standards, contending the Senate bill would be extremely costly and limit the consumer's choice of vehicles.