The new rules aim at implementing a 2007 law mandating better fuel efficiency.

The new standards will raise the industry-wide combined average to 27.3 miles (43.9 kilometers) per gallon (3.8 liters), a increase of 2.0 miles per gallon over the 2010 model year average, the Transportation Department said in a statement.

The change "will save about 887 million gallons of fuel and reduce carbon dioxide emissions by 8.3 million metric tonnes," the agency said.

Transportation Secretary Ray LaHood said that work on the multi-year fuel economy plan for model years after 2011 is already well underway.

The administration of president George W. Bush had proposed new standards but in January scrapped the effort, leaving the update until after the presidential transition.

On January 26, President Barack Obama directed the Transportation Department to finalize the 2011 model year standard by the end of March.

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