Second of three parts - WATERLOO -- Flex-fuel vehicles will save people money. Period.

Witham Auto Centers in Waterloo is so confident E85 -- a blend of 85 percent ethanol and 15 percent gasoline -- will help customers, every new Ford F-150 pickup it orders with a 5.4L motor can use it. The F-150 is Witham's best-selling vehicle.

Thanks to tax breaks and improved manufacturing practices, ethanol tends to be cheaper than regular unleaded. Usually by a few cents per gallon for a 10-percent blend and up to 20 to 50 cents for E85, depending on supply and demand. Due to high gas prices, the auto industry is betting flex-fuel vehicle sales -- those that can burn E85 and other types of gas -- will dramatically increase.

Michael Schley, Witham general sales manager, said people who drive a good distance to work every day can easily spend $400 a month in gas. Especially those with eight-cylinder trucks that get significantly less miles per gallon than four-cylinder cars. By filling up with E85, he thinks some people could save 25 percent on their fuel bill.

"That's a $1,200 savings in a year. That's a big selling feature," Schley said.

Witham, along with other auto dealers in Northeast Iowa and manufacturers, are advertising flex-fuel vehicles as good for the wallet and environment. Ethanol burns cleaner than gasoline. Witham sells 15 to 20 new flex-fuel vehicles a month, mainly trucks, and a handful of used models.

Both General Motors and Ford started aggressive E85 marketing campaigns last month, promising to build hundreds of thousands of new flex-fuel vehicles and partnering with ethanol producers to make the corn-based fuel more readily available. Only 2 percent of the vehicles on the road today in Iowa are flex-fuel, industry figures indicate.

Ford is putting stickers in the windshields of flex-fuel vehicles promoting them, while GM is installing yellow gas caps in support of their "Live Green, Go Yellow" campaign.

"E85 burns cleaner than gasoline and is a renewable, domestic fuel that can enhance the nation's economy and energy security," said Elizabeth Lowery, GM vice president of environment and energy.

When gas hit $3 per gallon following Hurricane Katrina last year, the Iowa Department of Natural Resources reported a sharp spike in E85 sales. Car dealers said interest in flex-fuel vehicles increased as well. Metro-area gas prices increased this week to more than $2.20 per gallon at most stations.

"We're getting more people asking for it (flex-fuel). … It's the fuel of the future, it will be everywhere," Schley said.

Today, less than one-half of 1 percent of gasoline sold in Iowa is E85. DNR statistics show 668,000 gallons of E85 were purchased last year compared to overall gasoline sales of 1.6 billion gallons.

Tax incentives and grants are available to fuel retailers to help install costly E85 pumps and tanks. Car dealers believe the distribution network will grow and they don't want to miss out on possible sales.

Vern Laures Auto Center in New Hampton regularly advertises in the Farm Bureau Spokesman, a paper geared to Iowa farmers. A recent ad featured E85 cars and trucks with an ear of corn and a headline stating, "Wheels that will save $$."

Since flex-fuel vehicles don't cost any more, co-owner Mitch Laures said people are opting for them when there's a choice. Manufactures are picking up the additional cost to make a vehicle flex-fuel -- special fuel systems and engine-computer programming to allow the motor to adjust between blends.

Northeast Iowa's only E85 pump opened last October at the Five Star Co-op gas station across the road from the dealership. Laures said that was like a match made in heaven.

"A lot (of our success) stems from the co-op across the street," Laures said. If car dealers and fuel retailers work together, it will be mutually beneficial to both. "We have a lot of requests for the vehicles, especially with the pump."

Surrounded by productive farmland, Laures said it's good for the dealership to push E85. If the fuel is successful, a lot of their customers -- corn farmers -- will be as well.

"It's coming full circle," Laures said.

The dealership sells about 10 new flex-fuel vehicles a month and a few used ones. Once more E85 pumps are available, Laures thinks sales will skyrocket.

One of the knocks on using E85 compared to other fuel is reduced fuel mileage. It contains less energy than regular gasoline. The Iowa Corn Growers say fuel mileage could drop 5 percent to 15 percent, depending on the vehicle and driving habits. Some estimates put it as high as 25 percent.

Schley drives a flex-fuel F-150 and hasn't noticed a drop. Even if there's a slight drop, he says cheaper fuel more than makes up for it.

Ethanol industry officials say a lack of knowledge nationwide about the fuel, comparatively few E85-compatible vehicles on the road and the lack of stations carrying it are obstacles to mainstream success.

Consumer research released in December said 70 percent of people didn't know what ethanol was or would consider using it. A recent well-publicized study said ethanol is good for America since it creates more energy than it takes to make it. For people who want to lessen America's dependence on foreign oil, this could help the industry.

"The auto industry is more of a player now. Not just building cars, but helping with the infrastructure," said Lucy Norton, spokesperson for the Iowa Renewable Fuels Association. "… We're already seeing the impact."

Contact Matthew Wilde at (319) 291-1579 or matt.wilde@wcfcourier.com.