(Source: Hyundai Motor America)
NADA's study discovered that about 7 million lower-income consumers will not qualify for auto financing with the proposed CAFE rules in place due to the extra costs

The National Automobile Dealers Association (NADA) has released a study that claims about 7 million car buyers will be cut from the new vehicle market due to the latest Corporate Average Fuel Economy (CAFE) proposal, which aims to increase the average fuel economy of cars and light trucks sold in the U.S. to 54.5 mpg by 2025.

The NADA study, called "The Effect of Proposed MY 2017-2025 Corporate Average Fuel Economy Standards on the New Vehicle Market Population," is based on a consumer expenditures report from the U.S. Bureau of Labor Statistics. NADA calculated debt-to-income ratios for households by looking at the purchasing behavior and financial profiles of a portion U.S. citizens.

NADA's study discovered that about 7 million lower-income consumers like families and college students would not qualify for auto financing with the proposed CAFE rules in place due to the extra costs.

"To work, fuel economy improvements must be affordable," said Don Chalmers, chairman of NADA's Government Affairs Committee and president of Don Chalmers Ford in Rio Rancho, New Mexico. "While you can mandate what automakers must build, you can't dictate what customers will buy, nor can you dictate if a bank will make a loan.

"If my customers can't buy what I've got to sell, there are no savings at the gas pump and there is no environmental benefit. If car and truck buyers do not purchase these new products, we all lose."

According to David Wagner, leader of the NADA study and an analyst with the NADA Used Car Guide, the government estimates that the price of new vehicles will increase by about $3,000 with the new CAFE rules in place, and this is what will cause millions of Americans to lose out in the new car market in the coming years.

"Disregarding vehicle affordability will undermine the environmental and national security benefits the administration is seeking," said Doug Greenhaus, NADA's chief regulatory counsel for environment, health and safety. "The proposed MY 2017-2025 fuel economy rules should be delayed until there is a more accurate picture of how prospective buyers likely will react."

It's no secret that NADA is against the proposed CAFE rules. Back in January, Chalmers announced that doubling today's fuel economy standards would force manufacturers to use expensive fuel-saving technologies that would bump up the sticker price of a new vehicle an extra $5,000. NADA previously said it expected to release a study that would show that the costs for the new higher fuel-economy standards will overshoot government estimates by over 60 percent (meaning an extra $5,000 to the sticker price for new 2025 models).

The government estimates that the sticker price of a new 2025 vehicle will be a about $3,000 higher, not $5,000, and the latest NADA study did not prove otherwise at this point.
According to TrueCar, the average transaction price of a new vehicle hit a new high of $30,748 in March 2012.

Sources: National Automobile Dealers Association, TrueCar [PDF]

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