NEW YORK (AP) -- A Wachovia analyst said Tuesday that the Detroit-based automakers and their suppliers could be hurt by President Barack Obama's proposal to raise fuel economy standards to an average of 35.5 mpg by 2016.
Obama is expected later Tuesday to announce the first-ever national emissions limits for cars and trucks, as well as require the 35.5 miles per gallon standard. Carol Browner, the White House energy and climate director, publicly confirmed the new initiative in appearances on morning network news shows.
Wachovia's Richard Kwas said he expects the proposal to lead to a greater product shift toward cars from light trucks, reducing the average vehicle part content and margin.
That change would especially hurt the U.S.-based automakers and the suppliers heavily dependent on them for business, such as American Axle & Manufacturing Holdings Inc., Lear Corp. and Magna International Inc., Kwas said.
On the flip side, companies that make fuel-saving turbochargers such as BorgWarner Inc., should get a boost as powertrain development programs get jump-started, he said.
In addition, the legislation also would raise the cost of luxury vehicles, potentially hurting companies such as Penske Automotive Group Inc., which sell a larger proportion of high-end vehicles, Kwas said.