Clean-burning cars ignite fight within dealers' ranks.

Byline: Diane Dietz The Register-Guard

When Monty King called around his Oregon Vehicle Dealers Association in recent months to gather opinions on Gov. Ted Kulongoski's strong-arm push for clean car rules, he found the unexpected.

The dealers weren't necessarily opposed.

"The overwhelming response was, `We like clean air, too,' ' said King, who works in Salem as president of the auto group. The dealers also said, ` `We don't see it's that big of a deal.' ''

Though some auto dealers had furiously battled Kulongoski's plan in the Legislature and had sued the state when the governor went ahead anyway, the industry, it turns out, is not a monolith of opposition as Kulongoski's plan proceeds.

Joseph McKinney, CEO of Eugene's Oregon Roads Inc., points out the difference in opinion within his own business sector. And McKinney - admittedly a breed apart from many dealers - is enthusiastic about the governor's plan.

The governor's order will require that all cars sold in Oregon meet California's famously tough auto emissions standards the same year the Golden State's new rules take effect: 2009. They require auto makers to cut car emissions by 25 percent and SUV and heavy truck emissions by 18 percent.

Opponents say the rules will raise the price of new cars, thus reducing sales, and many argue that the changes won't do much to reduce overall air pollution.

The state is rushing to institute the plan by late December, so the rules will be in place for the 2009 model year. If Oregon's plan advances, the Washington Legislature already decided that the northern state will follow suit, which will create what activists call a clean car corridor from Canada to Mexico.

Hoping to stop those dominoes from falling, another Oregon auto manufacturer's group and four Oregon car dealers squared off with the state's attorneys on Nov. 7 in Marion County Circuit Court. Both sides asked for summary judgment.

Now they're all awaiting a ruling by Judge Mary Mertens James that will decide whether Kulongoski can go ahead - or, conversely, that the governor's new rules are unconstitutional.

Fault lines

The clean car drive has proven a dicey issue for a few of Oregon's new and also used dealer associations.

The Oregon Auto Dealers Association, which represents 200 franchise new car dealers in the state, didn't join the lawsuit because doing so wouldn't have reflected the views of the organization's total membership, said Greg Remensperger, association executive vice president.

"We represent all of the dealers in the state of Oregon," he said. "The majority of them are of the same mind, but not everyone is."

The 57-year-old Oregon Independent Auto Dealers Association also has its dissenters, said McKinney, Eugene's iconoclastic dealer and an OIADA member. The organization sent out a message urging members to let the governor know that the clean cars initiative was the work of "environmental extremists," McKinney said.

"(But) it was not a message from the OIADA," McKinney said. "It was from one of the members on their board: a used car guy, a broker in Portland."

Four car dealers - from Coos Bay, Wilsonville and Portland - joined the national Alliance of Automobile Manufacturers to oppose Kulongoski's plan in court. The dealers are Coos Bay Toyota, Suburban Ford, the Don Rasmussen Company and Ron Tonkin.

Medford-based dealer Sid DeBoer, chairman and CEO of Lithia Motors Inc., did not join the lawsuit but said he doesn't support the governor's efforts. Lithia is one of the largest full-service new vehicle retailers in the United States, with 89 stores and 179 franchises in 12 states, with total revenue of $2.75 billion in 2004. DeBoer believes that the new-car requirements won't be effective in cleaning up the air, an assertion disputed by supporters of the rules.

"We've been encouraging him to support an increase in the gas tax," DeBoer said of the governor, "to encourage people to buy more economical cars and also to improve our highways in Oregon so people aren't stalled in traffic burning gas needlessly and emitting both carbon dioxide gases and polluted gases by not getting where they need to go."

"Lithia's totally for having clean air. We're an Oregon company. I was born here and raised here. But this is foolishness," he said.

None of the auto dealers based in Eugene-Springfield is on the plaintiff's list, and that's significant, McKinney said.

"Dealers are good neighbors. Dealers are not the big, bad guys up on a hill that you might think. They have to operate in their community."

McKinney, meanwhile, has linked arms with Oregon State Public Interest Research Group activists to promote the technologies the governor's plan eventually would require.

His Eugene-based Oregon Roads corporation does $12 million in sales a year leasing fleets of cars and trucks to businesses across the United States. Still, McKinney is not your standard auto dealer.

He's a self-described "leftist" who has campaigned for increases in the minimum wage because he believes in a "trickle up" theory. He sings in the Eugene Peace Choir. He's been arrested at the Pentagon.

But he says he's not the only dealer who supports clean cars.

"It's the future of the car business," he said. "The new car dealers I talk to, they'd prefer clean air. They're not opposing progress."

A question of money

The dealers and manufacturers bringing the lawsuit contend, however, that the clean car standards will add "thousands" of dollars to the price of a vehicle, reduce the demand for new cars and make a sizable dent in their revenues.

McKinney, on the other hand, says the evidence in the marketplace proves the reverse.

Hybrid cars are hot commodities, he said. They burn gas, but they also run on electricity part of the time, so they're cleaner. They also get upward of 50 mpg.

Chuck Gittere, fleet sales manager for the Eugene-Springfield based Kendall auto group, said he can sell "as many as Honda will let us have."

"Demand is really high," he said. "We don't have any Civic hybrids in stock. Toyota is sold out also."

Manufacturers are responding. This week, Toyota announced plans to boost production to 600,000 hybrids a year by 2008. In September, Ford said it would ramp up to produce 250,000 hybrids per year in 2010. Both are 10-fold increases.

Hybrids are in such short supply that they retain their value, McKinney said. "Right now the (Toyota) Prius has the best resale value of any car on the street," he said.

Two-year-old Prius hybrids sell for only $2,000 less than their new price. Other cars can lose upward of $10,000 of their value during the same period, McKinney said.

"Dealers profit selling hybrids," he said. "There are lists of people for these hybrid cars. People pay list price for hybrids when, on the other hand, there's a $5,000 rebate on a '05 Ford Explorer."

OREGON AUTO TRADE

These groups represent Oregon auto dealers, plus one national automakers' group:

Oregon Vehicle Dealers Association: Represents 128 mostly used car dealers. www.oregonvda.com

Oregon Auto Dealers Association: Represents 200 franchised new car dealers. www.oada.biz

Oregon Independent Auto Dealers Association: With 850 members, this group includes mostly used - and some new - car dealers. www.oiada.com

Alliance of Automobile Manufacturers: Automakers' lobbying group - which represents BMW Group, Daimler- Chrysler, Ford, General Motors, Mazda, Mitsubishi Motors, Porsche, Toyota and Volkswagen - spurred a lawsuit against Oregon's emissions proposal. www.autoalliance.org

CAPTION(S):

Joseph McKinney of Oregon Roads Inc., based in Eugene, agrees he's not the typical auto dealer - he's an activist who sings in the Eugene Peace Choir. But he says many new and used car dealers in Oregon support the proposed emissions standards: "It's the future of the car business." Wayne Eastburn / The Register-Guard