Back Seat Driver

Backseat Driver
Jerry Flint, 05.16.06, 6:00 AM ET

General Motors likes to brag about its energy-efficient cars and trucks, but most of us do not think much of the effort. Even the president of the United States has criticized Detroit, and that means GM. Yet, in its just-issued annual report, GM tells stockholders, “We have a good story to tell …”

What is the good story? Here are some highlights of the message:

--That GM (nyse: GM - news - people ) offers more vehicles here with an Environmental Protection Agency highway mileage rating of 30 or more miles per gallon, which is “more than any other automaker.”

--GM has nine models that can run on an 85% ethanol, 15% gasoline mixture (E85), and has built 1.5 million flexible-fuel vehicles.

--The company has a hybrid bus running and has been selling a light hybrid pickup truck for two years.

--A low-cost hybrid system is coming for the Saturn VUE sport utility vehicle, which will have a base sticker of less than $23,000.

--GM also promises that, starting with the 2008 Chevy Tahoe, its next generation, two-mode hybrid system, developed with DaimlerChrysler (nyse: DCX - news - people ) and BMW, will go into production.

--The company also has the belief that over time it can commercially develop a miracle propulsion system, the fuel cell, that will not need gasoline and will emit no pollutants, only friendly H20.

All that sounds wonderful, but I worry that executives at GM might actually believe this public relations copy. What is wrong with the story that GM is telling in its annual report and in national advertising?

Let us start with the bragging about all those GM vehicles that get 30 miles per gallon on the highway. Most of GM’s customers buy trucks, and those trucks do not get anywhere near that mileage. The actual mileage for those vehicles is closer to 16 mpg. For passenger cars, I figure that GM holds around 16% of the U.S. retail market, excluding rental fleets, so there are not that many buyers for GM’s fuel-stingy cars. One of GM’s best-selling economical cars is the Chevrolet Aveo, which GM’s Daewoo affiliate builds in Korea. The Aveo does not help GM save U.S. jobs or factories.

Yes, GM is making a big push for E85 and flex-fuel vehicles. But you would be lucky if you could find one of the few E85 gas pumps somewhere in the Midwest, This won’t mean much until most of American’s gasoline stations offer E85.

It is also true that GM sells some hybrid buses, but riding the bus is not the major transportation method in this country. Most of us drive to work, so the significance is small. As for that “hybrid” pickup, it is not really a hybrid, saves little fuel and GM makes only a handful anyway.

OK, the coming hybrid Saturn Vue--due later this year--might attract some interest. But the gain is four miles per gallon, and I have my doubts about how much excitement that will cause. The crucial new hybrid system for GM’s bigger trucks, such as the Chevy Tahoe SUV, is at least 18 months away. I expect a 25% mileage improvement with this technology, which on paper means 20 to 22 miles per gallon from combined city and highway driving on the four-wheel-drive models. I do not underestimate this new hybrid technology from GM and its partners, as it could be important in keeping big vehicles viable in this day of $3 and up gasoline. Even so, 21 mpg is not shock and awe.

General Motors does not seem to understand why Toyota Motor’s (nyse: TM - news - people ) Prius hybrid got everyone so excited. For starters, Prius is a distinct model--one that does not look like anything else on the road. Every Prius is a rolling billboard for Toyota and its hybrid technology. While every Prius customer may not get the stated mileage of 60/51 (city/highway) mpg, they should get somewhere in the mid-40s. Just imagine what we would think about GM if the Prius were a Chevrolet, and if GM had used the $1 billion it spent on its failed electric car, the EV-1, to develop a unique hybrid car.

Maybe GM’s investment in fuel cell technology will pan out some day. Maybe someday. The company has made progress in improving the efficiency and reducing the cost of fuel cell vehicles, but it is still several orders of magnitude away from making this technology financially viable. In addition, the distribution infrastructure for hydrogen is a far bigger obstacle than retrofitting today’s service stations for E85.

It’s a shame that GM just doesn’t seem to understand the power of showmanship. We all remember Babe Ruth, but who remembers the greatest hitter of bunt singles? A Chevrolet Tahoe that gets 21 miles per gallon is a fine technical achievement. So is a bunt single.

What should GM do to enhance its reputation in fuel economy? For starters, it should Take the Pledge: Every new car and truck will have better fuel economy that its predecessor.

The company should announce a goal to build a car with a conventional engine getting a real 50 miles to the gallon. Every year at the annual Detroit auto show, GM should have a show car demonstrating progress toward that goal.

GM should also embark on a high-priority program to offer diesel engines in all its big pickups and SUVs--effective as soon as the big oil companies get off their rumps and make low-sulfur and higher-quality diesel fuel available everywhere in the country. Speaking of the oil companies, GM should publicly pressure them to make ethanol-based fuels widely available at U.S. service stations.

Finally, I think GM should rise to the challenge of the Toyota Prius and make its own unique hybrid--something special, akin to the BMW Mini. If done right, the company could keep a factory busy making this vehicle, and get top dollar for it, too.

Jerry Flint, a former Forbes senior editor, has covered the automobile industry since 1958. Visit his homepage at www.forbes.com/flint