Car manufacturers could be shooting themselves in the foot through their opposition to proposed US legislation to raise fuel economy standards, according to a major new report from financial group Citi and environmental investment coalition Ceres.

The analysis of the financial impact of the standards, which propose around a 40 per cent improvement in fuel efficiency by 2020, concludes that far from damaging car firms the new legislation would have no effect on the industry's profitability and could even benefit some manufacturers.

"The 2020 target is tough but attainable, requiring aggregate improvements of 2.5 percent a year, and - surprisingly - generating some growth in variable profits for most automakers," the report said, adding that it would particularly benefit suppliers of new auto technologies such as turbochargers, automated manual transmissions and diesel engine fuel injectors.

The report also singled out General Motors - which has joined other manufacturers in lobbying intensively against the tougher corporate average fuel economy (CAFE) standards - as a major beneficiary of the changes concluding it could gain as much as 25 cents per share in extra earnings as a result of the legislation.

It added that the standards could be met "with modest additions of existing technologies" and argued that while manufacturers are expected to rely on shift in their sales mix towards more efficient vehicles to comply with the legislation the most profitable approach would be to invest in fuel saving technologies.

Mindy S. Lubber, president of Ceres, welcomed the report claiming it proved that higher fuel efficiency standards could deliver a win-win scenario for manufacturers and customers. "The report's findings… show that automakers' shareholders can thrive while the automakers build cars and trucks that are better for our health and reduce global warming pollution," she observed.