TRAVERSE CITY, MI - Federal fuel economy requirements, not executives from new Chrysler owner Cerberus Capital Management LP, killed the Imperial luxury sedan, a top Chrysler official said August 9, according to the Web site,

Speaking to reporters at the Center for Automotive Research Management Briefing Seminars, Frank Klegon, Chrysler executive vice president of product development, said the decision not to produce the large sedan was made internally by Chrysler officials in response to proposed federal Corporate Average Fuel Economy standards.

Chrysler scrapped the Imperial, which would have been its largest and heaviest car, last month. It had been shown as a concept at the 2006 North American International Auto Show in Detroit and was to be produced in Canada.

The move came after the U.S. Senate passed fuel efficiency regulations that would require the auto industry to meet a fleet-wide average of 35 mpg by 2020 for passenger cars, pickup trucks, sport utility vehicles and vans.

The U.S. House approved an energy bill last week that does not address CAFE standards, but fuel efficiency requirements are expected to be addressed when House and Senate negotiators merge the two pieces of legislation this fall.

"You've got to have vehicles that are going to be above the line on those proposals," Klegon said of the standards, predicting that auto companies would have to change their product lines and consumers would have to adjust if the Senate proposal becomes law.

New York-based Cerberus took control of 80.1 percent of Chrysler LLC in a $7.4 billion deal that closed last week. DaimlerChrysler AG (nyse: DCX - news - people ), the former owner, will retain a 19.9 percent interest in the Auburn Hills-based company.

Originally posted on Fleet Financials