The groundbreaking deal in U.S. Congress to raise mile-per-gallon standards will compel the auto industry to churn out more fuel-efficient vehicles on a faster timeline than the companies wanted, though with flexibility to get the job done.

The auto industry’s fleet of new cars, sport utility vehicles, pickup trucks and vans will have to average 35 mpg (6.7 L/100km) by 2020, according to the agreement that congressional negotiators announced late Friday. That compares with the 2008 requirement of 27.5 mpg (8.5 L/100 km) average for cars and 22.5 mpg (10.7 L/100 km) for light trucks. It would be first increase ordered by Congress in three decades.

Majority Democrats plan to include the requirement in broader energy legislation to be debated in the context of $90 (U.S.)-per-barrel oil, $3-plus pump prices and growing concerns about climate change. The House plans to begin debate this week.

“It is a major milestone and the first concrete legislation to address global warming,” said Sen. Dianne Feinstein, D-Calif.

Environmentalists have sought stricter mileage standards for years, saying that is the most effective way to curb greenhouse gas emissions and oil consumption.

The energy bill will help accelerate plans by automakers to bring more fuel-efficient technologies to conventional engines and alternatives such as gas-electric hybrids and vehicles running on ethanol blends. For the first time, for example, manufacturers will receive credits for building vehicles running on biodiesel fuel.

Domestic automakers and Toyota Motor Corp. vehemently opposed a Senate bill approved passed in June that contained the same mileage requirements and timeline. They warned the measure would limit the choice of vehicles, threaten jobs and drive up costs.

The companies backed an alternative of 32 mpg (7.3 L/100 km) to 35 mpg (6.7 L/100 km) by 2022. At the time, Chrysler LLC executive Tom LaSorda told employees the Senate bill would “add up to a staggering $6,700 – almost a 40 per cent increase – to the cost of every Chrysler vehicle.”

But the compromise worked out by Rep. John Dingell, D-Mich., House Speaker Nancy Pelosi, D-Calif., and Senate leaders, maintains a significant boost in mileage standards while giving the industry more flexibility and certainty as they plan new vehicles.

The proposal would continue separate standards for cars and Trucks, extend credits for producing vehicles that run on ethanol blends, and allow automakers to receive separate credits for exceeding the standards and then apply those credits to other model years.

Michigan lawmakers secured an extension of the current 1.2 mpg credit for the production of each “flexible fuel” vehicle, capable of running on ethanol blends of 15 per cent gasoline and 85 per cent ethanol. Without the extension, the credits may have run out by 2010, but under the deal, they will be phased out by 2020.

The United Auto Workers union also won a provision intended to prevent companies from shifting production of less profitable small cars to overseas plants. At stake are an estimated 17,000 jobs.

The House’s energy bill, approved in August, did not include mileage standards, and lawmakers had worked since then to include them.

Rick Wagoner, General Motors Corp.’s chairman and chief executive, said the new rules would “pose a significant technical and economic challenge to the industry.” He said GM would tackle the changes “with an array of engineering, research and development resources.”

GM, Chrysler and Ford Motor Co. have announced plans to double their production by 2010 of flex-fuel vehicles. Toyota has said it will bring the option to the Tundra pickup.

Among hybrids, Toyota has dominated the market with the Prius, but several automakers are beginning to bring the technology to large SUVs and pickups.

Environmental groups estimate the deal would save the country 1.2 million barrels of oil per day by 2020 while helping motorists save at the pump.

“Cars are going to be more attractive to consumers because they won’t cost as much to own and operate,” said David Doniger, director of the climate center for the Natural Resources Defense Council.

Japanese brands accounted for nearly half the models in Consumer Reports magazine’s roster of vehicles winning the highest praise from their owners.

Toyota Motor Corp. came out ahead, with 10 of the 39 vehicles whose owners said in overwhelming numbers that they would buy the same model again, according to the survey released today.

American brands accounted for seven, or fewer than 20 percent, of the models rated “most satisfying” by U.S. consumers. But domestic vehicles gained ground for the first time in five years in the important family car category, where the V6-powered Ford Fusion and Saturn Aura won high marks.

Other top-rated U.S. vehicles included the Chevrolet Corvette, the Lincoln MKZ, the V8-powered Ford Mustang and the Ford Edge sport utility vehicle.

“These latest results suggest that domestic carmakers are getting better at capturing what people want in the car they drive every day,” said Rik Paul, Consumer Reports’ automotive editor.

Domestic vehicles still fill the ranks of “least satisfying” models, but many of those, like the Ford Freestar minivan, are no longer in production or are getting old.

Consumer Reports compiled the results from the responses to the same subscriber survey that generates the magazine’s closely watched reliability ratings. The magazine said the responses covered more than 300 models.

The findings confirm the results of other polls, which show that while the Japanese are ahead in terms of pleasing consumers, others are narrowing the gap.

“There’s no question that the quality gap has narrowed” and that Detroit’s automakers also are producing more attractively styled cars now, said Christopher Chaney, vice president at the San Diego-based consulting firm Strategic Vision, which also conducts auto surveys.

Fun, reliability big factors
Consumer Reports said the Toyota Prius hybrid car was rated the most satisfying vehicle for the fourth year in a row, with 92 percent of Prius owners saying they would definitely buy one again. Close behind were the BMW 335i coupe/convertible and the Porsche Boxster.

European models accounted for 12 cars on the list — a slight increase from last year and a disproportionately high number, given their small U.S. market share of less than 10 percent. European nameplates dominated the sporty car and roadster categories.

Two South Korean models, Hyundai’s Azera sedan and Santa Fe SUV, made the list of “most satisfying” cars for the first time.

David Champion, director of vehicle testing at Consumer Reports, said the highest-rated vehicles tended to be fun to drive and reliable. “If you buy a car and it doesn’t give you any problems, you tend to be satisfied with it.”

Although performance is a big factor, fuel efficiency is also an important consideration now, Champion said. “Cars that get good fuel economy are also very high in terms of owner satisfaction.”

Consumer Reports rates vehicles “most satisfying” if at least 80 percent of owners say they would definitely buy or lease that model again. They are rated “least satisfying” if fewer than half the owners would buy that model again.