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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 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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