CAFE Regs Could Add $5000 to the Price of New Vehicles

CAFE Regs Could Add $5000 to the Price of New Vehicles

That’s according to a statement made by Don Chambers, chairman of the National Automobile Dealers’ Association (NADA) government relations committee.

Under the Obama administration, the plans to boost Corporate Average Fuel Economy standards to a fleet average of 54.5 miles per gallon by 2025 would require the adoption of advanced technologies for each vehicle, in order for automakers to achieve them. It would also mean that a portion of the costs in utilizing these technologies would end up being passed onto consumers, which could result in pricing a number of potential new vehicle buyers out of the market.

A study, which NADA plans to release in February will show that the costs associated with using new fuel saving technologies will be far in excess of government projections, by as much as 60 percent in fact, which means the sticker price of a new vehicle could increase by as much as $5,000.

Chambers’ comments were made during a hearing in Detroit, where members of the public are given the chance to voice their comments on the proposed CAFE regulations, before they’re finalized later this year. Two more hearings are scheduled for later this month, one on January 19 in Philadelphia, another on January 24 in San Francisco.

However, despite criticism from the NADA, the proposed CAFE regs have strong support, not only from environmental groups like the Sierra Club but also the United Auto Workers’ Union and no fewer than 13 automakers, including the Detroit triumvirate of Chrysler, Ford and General Motors.

In fact, many of those  who attended the Detroit hearing, believe that in the long run, tougher fuel economy standards will ultimately save motorists money thanks to fewer trips to the pumps, as well as reducing US dependence on foreign oil supplies.

However, German automakers Daimler AG and Volkswagen, which currently offer some of the most fuel-efficient vehicles on sale in the US, won’t back the CAFE proposal because there’s no incentive for diesel fueled vehicles.

Chambers says he supports the notion for more fuel efficient vehicles, but if it increases the price to the point that buyers can no longer obtain financing then “it makes no difference.”

Mitch Bainwol, who heads up the Alliance of Automobile Manufacturers believes that, at the end of the day, consumer buying habits will ultimately decide whether automakers can actually meet the proposed Federal fuel economy standards, he also proposes a thorough mid-term review of the CAFE policy to see if the rules actually relate to fuel price trends, technological advances and consumer buying habits.

“Looking into the future, consumer purchasing patterns will be the biggest unknown,” he said, though given CAFE’s patchy track record, perhaps looking at lessons from the past could help paint a clear picture of what’s to come.

[Source: Automotive News]