New Corporate Average Fuel Economy (CAFE) standards are enshrined in federal law. It's 35mpg by 2020, or a 4.5 percent annual increase. So why would The Big 2.8, Toyota and Porsche renew their efforts to raise the bar? Especially as someone might be looking for federal loan guarantees… As mob boss Carl Rojeck said in "My Favorite Year," "the fighting is in rounds." Now that the The National Highway Traffic Safety Administration's (NHTSA) writing the fine print, the kvetching starts afresh. To switch movie references, "Can you squeal like a pig?" The Detroit News reports that The Big 2.8 have filed paperwork urging NHTSA's pen pushers to "roll back proposed 4.5 percent annual increases in fuel efficiency requirements between 2011-15." Apparently, "the new rules will force them to slow the rollout of some advanced vehicles." Huh? Wouldn't it make them speed-up? Go figure. GM: We can't build enough Volts [more on that in a separate post]. Toyota: the 2011 requirements are "too aggressive." Ford: the proposal "seems to impose a disproportionate share of the burden on domestic manufacturers." Chrysler: ""It will cost Chrysler LLC thousands of dollars per vehicle in additional technology, not hundreds of dollars." Porsche: We might have to "leave the U.S. market until such time they develop new vehicles with advanced propulsion systems." Hyundai: bring it on!
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Toyota should just sell nothing but Priuses. They’ll be fine after that.
Wiggle, wiggle …… bring in the lobbyists.
The truth is 2011 isn’t that far away and a good portion of the North American automotive and truck product mix suffers from decades of up sizing. The phenomena is not just with truck offerings from the Big 2.8. Even the Honda Accord is now supersized and not so desireable when paired with a base 4 cylinder engine.
This type of wiggling is what killed raising the CAFE standards for light trucks back in the early 90’s.
If US carmakers put as much effort into building cars that people wanted as fighting sensible regulations they wouldn’t be tanking.
How about keeping the CAFE schedule but opening up the market in other ways?
How quickly could manufacturers sell, ship, distribute, support & repair smaller models from overseas if federal regulations were changed to allow importation of cars for sale in the EU & Japan that might not otherwise meet U.S. regulations?
2 cheers for driving course!
Socialists: “We need CAFE because people will choose SUVs and use up all the gas!”
Libertarians: “Allow people to choose for themselves. Demand will dictate gasoline prices which will drive vehicle selection.”
2008: Gas prices go up, SUV sales tank regardless of CAFE.
For some reason we’re wasting more time on more CAFE…
Don’t ‘ya just love that can’t do attitude.
It’s what made America what it is today.
Meanwhile Honda continues working. People make their purchase decisions based on what a specific model does; not on some corporate average or what fines the manufacturer faces. Guess this is too complex for Wagoner etc. to grasp. It’s easier to sit around a table and bitch than make cars that will sell.
The reality is that automakers make most of their money on the larger, more powerful vehicles. The D3 in particular have been unable to produce a small car at a profit.
Regardless of technology, the new CAFE regulations force manufacturers to offer the smaller, lower priced, lower margin products. What they are particularly upset about is the hit to their profitability, although as the article states,if the current climate continues, CAFE regulations may become irrelevant.
The D3 in particular have been unable to produce a small car at a profit.
From an article in the WSJ today that deals with Toyota’s changing plans for US plants, a plant has to run at 75-80% capacity to be profitable. Of course a vehicle could lose money regardless of the load level in a plant, but is this 75-80% of a 3-shift operation? If so, any plant will lose money with a 2-shift operation; e.g. Lordstown.
As we all know, CAFE is a regulatory response, not a market based response. For those of you old enough to remember when CAFE was first introduced, all of the auto companies used to go through all kinds of gyrations to have the regs written to include or exclude certain vehicles and vehicle types, depending on whether it was beneficial to their CAFE numbers. We’ve lost sight of this because the numbers haven’t mattered for so long. This process has never added any value, just cost to manage, lobby and litigate. The market (price of gas) is forcing new purchase behavior faster than any regulation ever will.
I think a more interesting discussion is whether gasoline taxes could have had the same impact and what would have happened to the tax revenue.
The D3 could have something on the road now that is fuel efficient and profitable had they not all pissed away their R&D on trucks and SUVs. Now they are stuck between a rock and a hard place.
Not all small fuel efficient cars have to be cheap either. Look at Europe and Japan – there are plenty of very nice luxury based smaller cars that sell for a tidy profit. Just because the USA is the home of super sized everything doesn’t mean small can’t be or shouldn’t be profitable.
CAFE is rather meaningless at this point as higher fuel prices are changing consumer preference anyway but I do find this amusing.
I can only assume they are trying to keep truck and SUV sales at their current lower level versus at complete zero.
It’s interesting that it was easier to buy cars with decent gas mileage from domestic manufacturers before CAFE than today. It’s was one of CAFE’s side effects that light trucks became favorite platform for building cars. It is despite CAFE today that SUVs and light trucks have dropped. Free market regulates better than a bunch of know-it-alls in the government. Leave it to the free market.
CAFE may, in large part be meaningless, but unless or until (read: never) US lawamakers grow the brains and balls to tax fuel, it will have to do.
Put a floor under the price of crude oil and apply enough tax to raise the price of gasoline to six or seven dollars a gallon.
Then, individual states would align a sliding scale of vehicle registration fees to engine displacement – something on the order of a max of $1000.00 per year for engines in excess of 2 liters.
Accomplish these initiatives and yes, CAFE will no longer be needed…and the US industry will have the “level playing field” they have sought for so long.
Toyota: the 2011 requirements are “too aggressive.”
There was a report yesterday in CNN that the guy in Japan in charge of Hybrid Camry development had worked himself to death. I’m not sure how they can get any more aggressive than that.
If fuel had been taxed, rather than ecomony regulated by CAFE, think of all the petrodollars that would have wound up in the government coffers of our country, rather than those of the oil producers (governments and countries). Say what you will about our politicians, I’d have rather them have this money.
Sherman Lin Says:
July 10th, 2008 at 9:56 am
CAFE is rather meaningless at this point as higher fuel prices are changing consumer preference anyway but I do find this amusing.
I can only assume they are trying to keep truck and SUV sales at their current lower level versus at complete zero.
I totally agree.
The used truck/ SUV market has tanked, but if the level is zero due to CAFE, then the used truck/ SUV market will certainly rebound.
NICKNICK Says:
Socialists: “We need CAFE because people will choose SUVs and use up all the gas!”
Libertarians: “Allow people to choose for themselves. Demand will dictate gasoline prices which will drive vehicle selection.”
2008: Gas prices go up, SUV sales tank regardless of CAFE.
For some reason we’re wasting more time on more CAFE…
Yes, the recent run-up in gasoline prices has underscored the fact that CAFE is ineffective public policy with an unblemished 30-year record of failure. Higher prices — brought to us through the free market rather than through European-style fuel taxes — have done what years of regulation didn’t do. What a pity that our politicians are too dense to learn from their mistakes and jettison CAFE.
Another way to look at it is that if CAFE had been allowed to go up in the last 15 years, automakers would have been forced by now to build small cars that didn’t betray a loathing for the very existence of their buyers.
Count me as a guy who’d much rather have a big fuel tax too – but those of you who say now you’d rather have done it that way are being disingenuous – the same reactionary rhetoric you’re using against CAFE would very quickly be applied against this ‘new tax’.
Again, people go attacking Detroit, because of the popularity (well not so much anymore) of their trucks makes it harder for them to meet CAFE. And they point to Honda or Toyota as being able to attack and meet these regs.
Ok, fine. However, without super expensive materials and powertrains, almost nothing on the road today meets these standards, not to mention the averages can’t be met either. 2010 and 2011 models are already in various stages of development, you can’t just flip a switch and make it work. But the gov’t seems to think you can.
Think about it, even if we all drove Yaris, MINI’s, Fits, Civics, Corollas and Prius’ we still wouldn’t hit these numbers. And the bread and butter cars american’s love (sedans)? Not even close.
I just think its funny how people say the Japanese are out there making it happen. Fact is, no car company that I know of (at least producing a full lineup) can meet these standards.