Strict New MPG Rules to Raise Used Vehicle Prices: Study
Upcoming corporate average fuel economy (CAFE) standards mandate that new vehicles sold in 2025 and beyond will need to get an average 54.5 mpg, a standard that aims to save the U.S. 2.2-million barrels of oil per day.
But according to a recent study by Mark Jacobsen of the University of California, San Diego and Arthur van Bentham of Wharton, the fuel regulations could have an unintended effect on the used car market. The belief is that the stricter fuel economy rules will make new SUVs, pickup trucks and other inefficient vehicles more expensive.
As a result, people will turn to the used car market, ultimately raising the price for older SUVs and pickup trucks. That in turn will give owners a reason to hang onto their old vehicles even longer.
By studying vehicle scrappage rates, Jacobsen and van Bentham found that the least-efficient cars stay in the owners’ possession the longest. The two believe that between 13 to 23 percent of the expected fuel savings from the Obama administration’s fuel economy plan could “leak away” as a result of people turning to the used car market, or holding onto their vehicle longer than typical.
[Source: The Washington Post]
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Jason Siu began his career in automotive journalism in 2003 with Modified Magazine, a property previously held by VerticalScope. As the West Coast Editor, he played a pivotal role while also extending his expertise to Modified Luxury & Exotics and Modified Mustangs. Beyond his editorial work, Jason authored two notable Cartech books. His tenure at AutoGuide.com saw him immersed in the daily news cycle, yet his passion for hands-on evaluation led him to focus on testing and product reviews, offering well-rounded recommendations to AutoGuide readers. Currently, as the Content Director for VerticalScope, Jason spearheads the content strategy for an array of online publications, a role that has him at the helm of ensuring quality and consistency across the board.
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