Foreign Automakers Could Get Fuel Economy Exemption

German luxury auto makers including BMW AG and Daimler AG's Mercedes-Benz are close to benefitting from a U.S. concession that will allow them and a few other foreign makers to keep selling cars that emit more greenhouse gases than those made by mass-market rivals such as General Motors Co. and Toyota Motor Corp.

Under a provision of a plan to curb greenhouse gas emissions, the Obama administration has proposed to set less stringent standards for car makers that sell fewer than 400,000 vehicles a year in the U.S. That target defines the major German brands as well as a few smaller Asian manufacturers such as Suzuki Motor Corp. and Mitsubishi Motors Corp.

The easier targets are expected to apply to a limited portion of a car maker's sales volume, and last for about four years — unless the government grants an extension.

"Once companies become dependent on these provisions, they have an incentive to hire lobbyists and exert political pressure to extend those same provisions," said John Graham, who helped craft automobile fuel-economy regulations under President George W. Bush.

"The German provision" — as it is known to industry lobbyists — resembles a California law that effectively exempts some foreign car makers from having to meet the same emissions standards as their U.S. rivals. BMW and Daimler declined to say whether they lobbied for the provision.

In effect, the provision would make it easier for Mercedes to keep selling cars like its $147,000, 12-cylinder S600 sedan, rated at 13 miles per gallon, while GM or Toyota would be required to meet tougher mileage standards with smaller, more efficient cars.

The rules are expected to be formally proposed later this year by the Environmental Protection Agency and the Department of Transportation to enforce the administration's mandate that makers boost the average fuel efficiency of their fleets to 35.5 miles mpg by 2016.