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Automakers claim new fuel economy ratings will put hundreds of thousands out of work  (Source: Business Week)
Supporters of increased efficiency standards claim the numbers are inflated

The battle between the auto industry and the federal government over changes to fuel economy regulations is exploding. Lawmakers in Washington want to impose much more efficient standards on future vehicles that could see a fleet wide fuel economy average of 62 mpg in effect by 2025.

Some in the automotive industry argue that the costs to reach the lofty 62 mpg fleet wide average will be much higher than the cost of burning more fuel in less efficient vehicles for consumers. Automakers have previously claimed that the costs would have a dire impact on the industry.

new study by the Center for Automotive Research has been published and the study claims that the rise in efficiency standards by 2025 to 62 mpg could add up to $9,790 to the cost of a new vehicle and will reduce sales by 5.5 million units. The report also claims that the resultant price increase would force a reduction of 260,000 automotive industry jobs due to reduced demand for vehicles by consumers.

On the other side of the battle, those pushing for the increased efficiency standards claim that the tech needed to meet the efficiency standards would only add $770 to $3,500 to the price of a new vehicle.

David Friedman, deputy director of the Union of Concerned Scientists' Clean Vehicles program and supporter of the new efficiency mandate, said, "The Obama administration should ignore this industry-advocate propaganda piece and focus on setting the strongest vehicle efficiency and global warming pollution standards based on credible scientific analysis."

President and CEO of the Union, Jay Baron, says that the main difference in cost between the industry and government studies depends on how much the price of the technology will come down over the next 15 years.



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RE: Because who knows better
By mindless1 on 6/15/2011 2:40:18 PM , Rating: 3
Innovation to me would be LOWERING the cost to get the same thing. I don't know how to put it but the way I get from point A to B driving a car hasn't changed much in recent years. I don't want big brother deciding for me what I can and can't buy, let the FREE MARKET decide.

Let the automakers build whatever they want to, and the *winning* combination of design and price revails. But wait, letting the citizens decide what happens as individuals, with their wallets, seems too democratic or something.


RE: Because who knows better
By Smilin on 6/15/11, Rating: -1
RE: Because who knows better
By FITCamaro on 6/15/2011 3:09:25 PM , Rating: 1
Yes and we've gone far beyond the reasonable constraining of it to protect consumers.


RE: Because who knows better
By Smilin on 6/15/2011 3:20:29 PM , Rating: 1
That's a full debate in itself.

If you'll concede that the free market doesn't self-solve every problem then I'll meet you in the middle and concede that govornment meddling can indeed get too heavy handed.


RE: Because who knows better
By Denigrate on 6/15/2011 4:16:16 PM , Rating: 1
"Can"? I think the right answer is "Always does". Please point out the last government project that was anything close to being efficient, or remotely used a light touch.


RE: Because who knows better
By Shadowmage on 6/15/11, Rating: 0
RE: Because who knows better
By torpor on 6/15/2011 6:18:08 PM , Rating: 2
RE: Because who knows better
By Shadowmage on 6/15/2011 6:35:01 PM , Rating: 2
Yes, the Free Republic is an excellent source.

[/sarcasm]


RE: Because who knows better
By torpor on 6/16/2011 3:24:34 PM , Rating: 3
There are pages and pages of counter opinions in that google result set.

Read any of them you like, if Free Republic isn't your thing. But in the information age, saying you aren't aware of a counter opinion on an economic topic is the same as saying you don't care if one exists.

Spare me your willful ignorance.


RE: Because who knows better
By ppardee on 6/15/2011 7:02:29 PM , Rating: 3
Yeah, well, even a dead squirrel is right twice a day...

The interstate system was a good move because they filled a definite and distinct need. But it could have gone either way. It very possibly could have flopped. The government could have built roads to nowhere. At that point it would have been a colossal waste of money. FDR got lucky that people built where the roads went.

You can see the same thing happening in China. The Chinese gov. is building cities, complete with housing, malls and roads, but no one is moving there. It very well could have been the most successful government program in history and been lauded as a triumph of communism. It was the will of the market that determines how successful the action is.

This is the reason why profits are a good thing. They allow companies to determine if the action they are taking is positively impacting people they will never meet and rarely get any direct feedback from. Nothing the government does has any real feedback. Sure, we elect our representatives every 2-6 years, but this doesn't reflect on individual actions (and in some districts it doesn't reflect on anything but the marketing done by the candidate's team).

So, yeah... FDR got lucky. There isn't any real distinct need for 62 mpg vehicles. Any thinking man will tell you that increasing gas mileage has diminishing returns. Going from 10mpg to 20mpg saves you 5 gallons of fuel per 100 miles driven. Going from 20-40 saves 2.5 gallons. Jumping all the way up from 40 to 100 mpg saves 1.5 gal/100miles driven. 100-200 saves .5 gallons.... what's the point? And where does it end? The government doesn't know. The free market does, but only when we get there.


RE: Because who knows better
By Spuke on 6/16/2011 12:26:16 AM , Rating: 2
quote:
The free market does, but only when we get there.
Good post!! Thanks for that info.


RE: Because who knows better
By Bad-Karma on 6/16/2011 3:59:20 AM , Rating: 3
FDR had nothing to do with the interstate system. That was undertaken with President Eisenhower more than 13 years later. Eisenhower witnessed the Germans ability to reshuffle and resupply whole divisions almost overnight using the autobahns and rail networks.

And it was developed more out of a need for military logistics and readiness than economics. While economic development wasn't exactly secondary it was not the initial intent.



RE: Because who knows better
By ppardee on 6/17/2011 6:19:59 PM , Rating: 2
I stand (gratefully) corrected... I hate FDR! :)

Thanks for the info! It looks like the history of it is worth more research.


RE: Because who knows better
By FITCamaro on 6/15/2011 11:31:27 PM , Rating: 1
The interstate system was a good thing.

As a whole, the New Deal did nothing but prolong the depression.


RE: Because who knows better
By Bad-Karma on 6/16/2011 4:06:43 AM , Rating: 1
Your exactly right. The country didn't really begin to recover until the last couple of years leading up to WWII and our retooling of industry. First for the Lend lease effort to Britain and the Soviet Union, and later with our own involvement.


RE: Because who knows better
By FITCamaro on 6/16/2011 12:03:36 PM , Rating: 3
I guess people feel 97% tax rates were great for economic investment.


RE: Because who knows better
By dgingeri on 6/15/2011 3:08:56 PM , Rating: 3
quote:
Let the automakers build whatever they want to, and the *winning* combination of design and price revails. But wait, letting the citizens decide what happens as individuals, with their wallets, seems too democratic or something.


To do this would mean the union people would lose their jobs because they demand too much pay for the business to compete. It would mean lazy bums and incompetents would lose jobs so that those who are willing and able to work can compete better.

We can't have a free market in a country of mostly lazy incompetents. the majority rules.


RE: Because who knows better
By JediJeb on 6/16/2011 5:52:07 PM , Rating: 2
Maybe the majority isn't the lazy incompetents but those willing to work harder and more efficiently at a lower wage yet are barred from competing for the jobs by laws that only allow the industries to hire the more expensive workers regardless of how hard or efficiently they can work.

It has turned into a situation of minority rule with minority rights instead of majority rule with minority rights as our laws are intended to be. Union automotive jobs and state highway workers are two groups that come to mind with this. Both groups, once hired and through the initial 60-90 day trial period become almost impossible to fire no matter what they do or don't do on the job and raises are only based on time worked and have nothing to do with how well you do your job. But you know that is exactly what is being taught in the schools now days too, everyone is equal and all deserve the same things regardless of whether or not they put in any effort.


RE: Because who knows better
By wallijonn on 6/15/11, Rating: -1
RE: Because who knows better
By theapparition on 6/15/2011 4:44:07 PM , Rating: 2
What an utterly incompetent backward analysis.

People WANT big cars and SUVs. The auto manufacturers (all of them, Toyota, Honda and Nissan have plenty of those "evil" SUVs too) were only happy to oblige by producing what people WANTED.

Don't give anyone else the marketing BS. Marketing didn't create the desire for American consumer preferences. You act like someone is sitting on a couch, sees an ad for a Hummer and all of a sudden changes thier mind not to get an econobox. Ridiculous.

Auto companies made what people wanted, and when consumer preferences shifted quickly, the automakers who had the most invested in those high profit models felt the pinch the most.

quote:
In Phoenix nearly 50% of the vehicles seem to be SUVs. I'd wager that less than 1% use them off road. I'd also wager that you can't buy or sell a SUV in NYC right now.

SUV's have nothing to do with off-road capability. While Jeep popularized that image, the most important aspect of an SUV is it's utility (oh, imagine that, it's part of the name). People wanted on vehicle to haul the kids, pick up items from Home Depot, and have enough power to tow a boat. Do I think many owners of SUVs have overbought? Yep, but I'll never infringe on thier rights to buy what they want.


RE: Because who knows better
By Shadowmage on 6/15/2011 5:35:41 PM , Rating: 2
What's the point of marketing then? Why did people buy Intel CPUs even during the P4 days, when AMD dominated? Clearly marketing influence peoples' purchasing decisions, and you'd be naive to think otherwise.

http://www.consumerpsychologist.com/


RE: Because who knows better
By torpor on 6/15/2011 6:23:11 PM , Rating: 4
Lots of reasons.

Some people remembered some of AMDs older products, which were horrible, and refused to trust them again.

Some people believed that the bandwidth capabilities of RAMBUS would outshine what AMD was offering, and wanted to buy into that model.

Some people had no idea what they were doing, and just bought what was familiar or easily available.

Some people would have bought AMD processor-based computers if they could find them, but due to proven monopolistic actions, Intel prevented AMD from effectivly getting their processors to the end consumer.

There are lots of reasons people buy/do things that have nothing to do with marketing. Marketing is used to attempt to create a perception about a product. What that perception is or should be, and why you want it, varies by product and strategy.


RE: Because who knows better
By Shadowmage on 6/15/2011 6:37:03 PM , Rating: 2
Obviously people aren't mind-controlled robots that do whatever marketing tells them. However, even you just admitted that marketing is indeed a major factor in peoples' considerations:

quote:
Marketing is used to attempt to create a perception about a product. What that perception is or should be, and why you want it, varies by product and strategy.


RE: Because who knows better
By mindless1 on 6/17/2011 10:54:21 PM , Rating: 2
Yes but remember it was written "used to ATTEMPT", not "does cause", and in this case it would be marketing "buy our SUV instead of the other brand SUV".

It's a bit irrelevant though, people already knew what type of vehicle they wanted, the advertising simply tells them "hey our company makes one of those".


RE: Because who knows better
By Shadowmage on 6/15/2011 6:38:21 PM , Rating: 3
Also, 2 of the 4 reasons you named are due to marketing:

quote:
Some people believed that the bandwidth capabilities of RAMBUS would outshine what AMD was offering, and wanted to buy into that model.

Some people had no idea what they were doing, and just bought what was familiar or easily available.


RE: Because who knows better
By Bad-Karma on 6/16/2011 4:21:04 AM , Rating: 2
Ummm.... At the time Rambus was a superior memory standard. What killed it was that it was a proprietary standard that was being stingily licensed and its' exorbitantly high price.

You could also add to the argument that being coupled to the P4 architecture did it in.

The inclusion of Rambus memory simply priced mainstream users out of the market. However, I will point out that lots of high end workstations in the business world still favored the combination or Rambus and Intel.


RE: Because who knows better
By torpor on 6/16/2011 3:16:04 PM , Rating: 2
Let me get this straight.

You feel it's marketing's job to publish technical whitepapers, and to encourage ignorance as a sales strategy?

The underwear gnomes know more about how to make money.


RE: Because who knows better
By Bad-Karma on 6/17/2011 5:25:14 AM , Rating: 2
quote:
underwear gnomes
.......You now have my full undivided attention!


RE: Because who knows better
By theapparition on 6/16/2011 9:52:13 AM , Rating: 2
Marketing's primary purpose is to distinguish your brand and product above the competition. It can also create demand for new products. Certainly, marketing has it's uses and I wasn't dismissing it entirely.

But the idea that the auto manufacturers created the demand for SUVs by marketing them is ridiculous drivel. Could it be that people just like them? In the 60's the family truckster was the van, then the station wagon in the 70's. 80's was decade of minivan, 90's of SUV and 00's is of crossovers. Consumer trends shift and manufacturers are more than happy to sell whatever people demand.

As for your Intel vs. AMD scenerio, everyone seems to have short term memory on the situation. P4 Willamette was far superior to anything that AMD had at the time. How many AMD systems overheated due to poor thermal management. P4 Northwood was extremely competitive, at first better, then towards the end of it's life getting eclipsed by AMD. Some benchmarks went one way, some went the other. P4 Prescott was a terrible chip, and the time when AMD's offerings were clearly superior. But in the whole "P4 war", AMD only had a clear product advantage for a short time.

As the other poster commeneted, there were many other reasons why people stayed away from AMD.


RE: Because who knows better
By Strunf on 6/15/11, Rating: 0
RE: Because who knows better
By theapparition on 6/16/2011 9:28:33 AM , Rating: 2
quote:
Funny families in Europe don't seem that smaller than in the US yet in Europe people want smaller cars

No they don't. Don't for one second kid yourself. People in Europe buy smaller cars because that's all they can afford. Taxes on gasoline, engine displacement and registration make larger cars unobtainable for all but the wealthy. And the wealthy don't buy small cars.

Another factor is the signifigantly higher population density, roads that date back to the crusades, and the lack of accessible parking make large SUVs untennable in the cities. That's not a slight at Europeans, just doesn't make financial or practical sense for most families to own SUVs. But the American situation is quite different, and anyone who trys to compare American and European habits are completely misinformed.

Try and spin it all you want, but Europe is home to such gas guzzlers as Bugatti, Ferrari, Lamborghini, Mercedes, BMW, Porsche and many other sport cars that are only able to be obtained by the wealthy. Find someone with the means, and I bet you'll see a Range Rover in thier garage.


RE: Because who knows better
By GTVic on 6/16/2011 3:26:25 PM , Rating: 2
The question is, why do Americans buy larger disposable vehicles. Why buy a Dodge Caravan when the evidence is all over the road that it will rust out at the same time as all the parts start failing which is right after the warranty expires?


RE: Because who knows better
By mindless1 on 6/17/2011 11:01:57 PM , Rating: 2
That's unfounded nonsense. Certain american automobiles do have quality control issues but if there's any vehicle that I always think of totally rusting out it would be the old toyota pickup trucks and that was over 20 years ago + age of truck.

The answer is obvious, Americans aren't tricked into squeezing themselves into tiny spaces, they can afford something larger because of the volume of larger cars being made reducing their cost per unit, and that with the gas prices being lower.

In america, the little econobox cars are the disposable ones not the larger cars, because of their higher RPM engines, their weaker suspensions, their lack of cargo space, how badly they get damaged in accidents making repair not cost effective, etc.



RE: Because who knows better
By surt on 6/15/2011 4:24:39 PM , Rating: 2
The free market has proven again and again that it will not guard the long term interests of this country against foreign forces. The market is a short-run tool only.


RE: Because who knows better
By FaaR on 6/15/11, Rating: -1
RE: Because who knows better
By EJ257 on 6/17/2011 9:43:29 AM , Rating: 2
Agree. We saw this in 2008 when gas prices went over $4 for the first time. People were ditching their SUVs and buying smaller, higher MPG models whenever they can. Then the depression hit, 2 of the big 3 US auto makers had to be bailed out. If we had let free market take its course we would be left with only Ford as the sole remaining US auto maker. I don't wish for people to loose their jobs but sometimes I wonder if it was the right thing to reward a company for making a series of bad decisions leading to insolvency and then bailing them out.


RE: Because who knows better
By mindless1 on 6/17/2011 11:09:38 PM , Rating: 2
That is a misconception. Generally people were whining about gas prices and driving less, not taking a financial loss selling a vehicle then incurring additional expense buying a new one, UNLESS they were wastefully driving excessive distances making them foolish to have bought the SUV in the first place without a need to haul things with it.

The US automakers weren't operating in a free market, there were alread government mandates effecting the price of cars, and competition against foreign automakers whose governments had devalued their currency to make them more profitable.

If we had had a free market you would see what is plainly obvious, that at least in the case of GM, they were still selling a lot of cars, the free aspect of customer choice was working, it was the union obligations that sunk them and that has nothing to do with free market as it relates to letting customers decide what they want to buy and be able to.

Government intervention that causes a company to make a product the customer doesn't want or value for the cost, is potentially a lost sale, and obviously worse for that company than if they offer what the prospective customer does want.

Further, the more expensive automobiles become, the lower the replacement interval because it becomes too expensive to replace a vehicle on a shorter time table and it takes more damage to total one when it has higher value so the existing consumer car age goes up on average, fewer cars sell per year.


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