On January 17, the National Automobile Dealers Association (NADA) voiced their opposition to proposed federal fuel-economy standards, noting that the requirements would limit growth of new car sales and make vehicles too expensive for some consumers in upcoming years.
The Obama administration wants automakers to raise the fleet average of new cars and trucks to 54.5 MPG by 2025. NADA announced their opinion at a hearing in Detroit on Tuesday to consider public feedback on the proposal. "I want to sell very efficient cars. But if the customer can't get the financing for that car, than it makes no difference. Finance sources do not look at how much you are going to save in fuel economy," noted Don Chalmers, a New Mexico-based Ford Motor Co. dealer and the NADA's government relations chairman.
The hearing featured presentations from Chrysler, Ford, and General Motors; United Auto Workers union President Bob King also made a presentation and described the process of coming up with the mileage target a collaborative effort. He noted, "Adopting the proposed rules will give an additional boost to the revival of the auto industry." He added that the union offered the plan "full and strong support."
U.S. automakers consulted with regulators on the proposed rules, which were made last November, that dictate fuel economy improvements from 2017 through 2025. The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) plan to hold additional public hearings in Philadelphia on January 19 and in San Francisco on January 26. The final rules are expected to be formulated by the end of the summer.
In 20111, Daimler AG and Volkswagen AG were among the auto makers who expressed concerns that the new standards would put undue burden on the car manufacturers. The way the rules are structured, companies that make high-performance vehicles or those that do not have a line of electric or hybrid vehicles that get special credits, would have a more difficult time meeting the standards.
"There appears to be no significant opposition amongst responsible persons," said Rep. John Dingell (D., Michigan), who serves on the House Energy and Commerce Committee, outside the hearing room before the NADA official spoke.
Current standards require automakers to improve efficiency to 35.4 MPG by 2016. The federal plan calls for a 5% average annual increase in fuel economy for cars and a 3.5% increase for light trucks through 2021. After 2021, both would be required to come up with a 5% annual increase. Credits for technologies such as solar-panel roofs and battery-powered vehicles could allow auto makers to comply without attaining 54.5 MPG. The plan also offers credits for hybrid trucks, alternative fuels, and other ways of improving fuel economy in ways that often do not register in traditional EPA mileage tests.
The EPA and NHTSA estimate that the additional technology required on vehicles will cost consumers $2,030 towards the purchase price of vehicles; however, the lifetime fuel cost savings in 2025 would amount to more than $6,000. If this prophecy pans out, consumers could save about $4,400. Mr. Chalmers noted that NADA disagrees with the cost analysis. The organization plans to release a study in February that will estimate that technology costs would add up to $5,000 to the price of a vehicle. Mr. Chalmers said he recognizes people who can afford the more expensive vehicles up front may save money over time; however, but many will not be able to afford it. "Doesn't matter if beans are a nickel a bushel, if you can't get the nickel you can’t get the bushel," Mr. Chalmers said.
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