Carmakers lean toward higher gas tax to fuel small-car sales

DETROIT -- The auto industry is warming up to the idea of higher taxes on gasoline to force buyers to keep considering fuel-efficient and small cars.

Automakers have shifted dramatically to production of small cars and expensive fuel-saving technologies partly to meet looming stricter government fuel-economy regulations.

The carmakers acknowledge that raising the gas tax is an unpopular idea, but they also saw how fast consumer preference shifted toward small cars when gasoline prices topped $4 a gallon last summer. Without that economic incentive, the tide is turning back to bigger cars, crossovers and trucks.

Gas now is taxed at the federal level at 18.4 cents a gallon. States tack on their own taxes, as do some metro areas. But the total pales in comparison with what European drivers pay. Taxes are about 60% of the pump price in Europe — pushing fuel prices as high as $6 a gallon now.

Automakers want to be able to charge premium prices for their smaller cars to make up for profits lost when sales of high-margin trucks fell off a cliff. They also must cover the cost of fuel-economy-related hardware and materials needed to meet federal rules — as much as $1,000 a car.

The issue could be crucial even for Toyota, considered financially stronger than the U.S. automakers. On Monday, Toyota unveiled the new Prius hybrid, which will get more than 50 miles per gallon in the city and is coming to the U.S. this summer.

Bob Carter, group vice president and general manager of the Toyota division, says consumers respond to gas prices: When they're high, Prius sales are strong; when they're low, Prius sales fall.

That doesn't surprise Mike Jackson, CEO of car-shopping site AutoNation, who has pushed for higher fuel taxes for more than a year. He says consumers talk about wanting fuel-efficient cars but don't buy them until gas prices are sky-high.