Jan. 25 (Bloomberg) — President Barack Obama is set to allow California to regulate greenhouse-gas emissions for autos, reversing a Bush administration ruling, people familiar with the matter said.

More than a dozen other U.S. states may then adopt the same standards, which are opposed by automakers. Obama, who will discuss his energy and environmental plans tomorrow, also will start finalizing new rules requiring cars and light trucks to be more fuel-efficient, the people said.

The Bush administration denied California a waiver to begin a state program intended to cut gases tied to global warming by 30 percent by 2016. Obama pledged during his campaign to reverse that decision.

General Motors Corp., Ford Motor Co., Chrysler LLC and companies represented by the Alliance of Automobile Manufacturers trade group sued to block California’s rules, arguing that developing vehicles that comply would cost billions of dollars.

Automakers also say the program creates regulatory chaos and will reduce the types of models they can sell in California and other states that want to adopt the rules.

GM, Ford and Chrysler last month got government pledges for as much as $17.4 billion in emergency loans to stave off bankruptcy. The three companies said this weekend that about 988 of their dealerships closed or were consolidated last year because of the lowest sales rate of light trucks and cars in the U.S. last year since 1992.

The Transportation Department earlier this month said the Bush administration would delay setting new fuel-economy rules, postponing action on an agreement between Congress and Bush to boost Corporate Average Fuel Economy, or CAFE, rules for the first time in three decades.

That left it up to Obama’s new administration to set guidelines for 2011 models before a March 31 deadline.

Obama is making an overhaul in the U.S. energy economy a key part of an economic stimulus package he is pushing lawmakers to approve by the middle of next month. His goals include doubling renewable energy generating capacity in three years and accelerating an overhaul of the nation’s power transmission system.

On the campaign trail, Obama promised to end U.S. dependence on oil from the Middle East and Venezuela within 10 years.

SOURCE: BLOOMBERG.COM

The Detroit auto show has dodged a bullet. For now.

Executives from BMW, Mercedes-Benz and Volkswagen — German automakers that take up large swaths of the Cobo Center floor at the event — considered shifting the companies’ emphasis to the Los Angeles show in a meeting in Detroit on Jan. 11, just as the news media preview for the North American International Auto Show began.

They decided to keep Detroit as their main venue for at least the next year, though they expressed dissatisfaction with the costs, size and quality of Cobo Center, which is smaller, older and dumpier than the Staples Center in downtown Los Angeles.

“We were delighted by the interest shown in BMW and the German auto industry collectively at media days” during the NAIAS, said Tom Kowaleski, BMW North America vice president for communications.

The German automakers are among the Detroit show’s big spenders. In addition to building elaborate displays in Cobo Center, they bring large numbers of executives and journalists to the city for several days. They and other automakers fill local hotels and stage events at venues ranging from the new Westin Book Cadillac hotel to the venerable Detroit Institute of Arts.

In addition, building displays for the show employs hundreds of construction workers for weeks before the show. A single two-level stand of the type many automakers have can require 40 skilled workers — often on two shifts — for six or seven weeks, said Larry Vallee, president of George P. Johnson, an Auburn Hills company that designs and builds displays.

“These events are critical for the city and for our business,” said John Forte, president of Forte Belanger, a Troy catering company that provided white-truffle popcorn, local beers and high-end snacks for a movie premiere Audi held at the Music Hall Center in Detroit. Forte Belanger’s auto show business was down about 60% from 2008, and most of its work this year was with foreign automakers as GM, Ford and Chrysler scaled back, Forte said. Forte Belanger also catered an event Toyota held at the Max M. Fisher Music Center in Detroit.

“The show is a great benefit to Detroit,” cochairman Joe Serra said. “The economic impact is huge, and Detroit is the focal point of news around the world in a positive way.”

While BMW, Daimler and VW’s decision is good news for Detroit for now, all automakers are rethinking their auto show strategies in the light of financial pressure and the emergence of new markets.

The rising importance of sales in growing markets like India, Russia and Brazil means the auto companies may increase their presence in auto shows in those countries, giving new competition for the existing A-level shows in places like Detroit; Geneva, Switzerland; Frankfurt, Germany; Paris; Shanghai, China, and Beijing.

Tokyo’s auto show was a must-see for years, but it has declined as foreign automakers gave up on selling many vehicles in Japan and focused their Asian efforts on China’s booming market. Japanese reports say this year’s Tokyo auto show may be canceled. Detroit’s three automakers have decided to drop out of the Tokyo show to cut costs.

In addition, all automakers could seriously cut back on auto show expenses because of the worldwide recession.

Automakers generally agree that the big shows remain their most cost-effective tool for marketing and unveiling vehicles, however.

While automakers hope to sell vehicles to customers at all shows, major international events like the NAIAS are driven by the number of journalists who attend and the amount of news media coverage automakers’ receive. Journalists, in turn, decide which shows to attend based on where automakers will show new vehicles and make news.

The Detroit and Frankfurt auto shows dominate news reporting in comparisons of international auto shows. News media reports from the Detroit auto show traditionally have outstripped Los Angeles by a wide margin.

This month’s Detroit show generated more than twice the news media coverage of November’s L.A. show, according to an independent analysis.

The German automakers meet to assess their plans at each of the major shows. The next meeting will take place at the Geneva auto show in March.

In addition to lower costs and a more attractive venue, the Los Angeles auto show benefits from the city’s climate, which offers more options for event-planning than January in Detroit.

The organizers of the Detroit auto show are working to reduce costs. “There will be changes next year,” to make it more affordable, executive director Rod Alberts said without specifying them.

The organizers also hope long-delayed improvements to Cobo Center will strengthen their competitive position versus other auto shows.

The initial suggestion to make L.A. the German’s primary North American auto show came several years ago from former Chrysler Chief Operating Officer Wolfgang Bernhard, sources familiar with the matter said. Bernhard was then a top executive at the Volkswagen Group. He has since left VW. He worked with Cerberus during its acquisition of Chrysler and recently became an adviser to Canadian supplier Magna.

The German automakers have an arrangement that they will agree on which show they concentrate on in each region, sources said. Once they choose a show, it takes a unanimous decision by BMW, Daimler and VW to make a change.

SOURCE: FREEP.COM

NEW YORK (CNNMoney.com) — More than three out of four auto executives expect more bankruptcies in their industry, according to an annual survey by audit and accounting firm KPMG LLP.

The survey of 200 top executives from automakers and suppliers around the globe found 77% expect more industry bankruptcies, compared to just 36% who expected an increase in bankruptcies a year ago.

So far, major automakers have avoided bankruptcy in spite of years of losses. But there have been widespread bankruptcy filings among auto parts suppliers in recent years.

The survey was conducted in the fall, before the U.S. government offered a federal loan package to General Motors (GM, Fortune 500) and Chrysler LLC to allow them to avoid threatened bankruptcy filings. Other governments around the world are considering assistance for their own automakers due to the sharp downturn in global sales.

The survey also found that 46% of the executives believe the profit outlook for the overall industry will be volatile over the next five years, and another 24% see profitability continuing to decline. Only 15% of those surveyed expect profits to improve.

Betsy Meter, a partner in KPMG’s auto practice, said she believes concerns about bankruptcies are still high, despite the fact that GM and Chrysler have received emergency funding to avoid running out of the cash they need to operate.

“I suspect it’s moderated slightly, but I think there’s a great level of uncertainty,” she said.

While most automakers around the globe haven been hit hard during this recession, the three U.S. automakers are still viewed as particularly vulnerable by industry executives.

More than 60% of those surveyed believe that GM, Ford Motor (F, Fortune 500) and Chrysler will continue to lose global market share in the coming years, while comparable percentages believe that Toyota Motor (TM), Hyundai/Kia, Honda Motor (HMC) and Volkswagen will all gain share.

In addition, about 80% of the executives said they believe Chinese and Indian automakers will gain market share.

Still, industry executives haven’t completely written off the U.S. automakers. Asked if they agreed with the statement that restructuring efforts in the U.S. industry may yet succeed, 50% said they did. However, that was down from 58% who agreed with this statement a year ago.

SOURCE: CNNMONEY.COM