NADA: 54.5 MPG CAFE Proposal Could Tack Another $5,000 to New 2025 Model Prices
January 18, 2012 10:03 AM
U.S. regulators say it isn't a big deal, since consumers will save on fuel over the vehicle's lifetime
A National Automobile Dealers Association (NADA) official said a new Corporate Average Fuel Economy (CAFE) proposal could add as much as $5,000 to the sticker price of a new vehicle.
The new CAFE proposal aims to increase the average fuel economy of cars and light trucks sold here in the U.S.
to 54.5 mpg by 2025
in an effort to reduce greenhouse gas emissions and lessen the country's dependency on foreign oil.
Don Chalmers, chairman of NADA's government relations committee, announced in a Detroit hearing for the proposal that nearly 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 is expected to release a study next month showing 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).
Chalmers argued that an extra $5,000 would put many potential buyers out of the new-car market because it could add another $60 to $70 to a monthly car payment and hurt a customer's chance to receive financing.
"I want to sell more fuel-efficient cars," said Chalmers. "If the customer can't get financing, it makes no difference."
U.S. regulators see the situation differently, though. Many believe the extra $5,000 wouldn't be an issue because customers save on fuel over the lifetime of the vehicle.
"We're hearing broad support," said Margo Oge, director of the Office of Transportation and Air Quality at the Environmental Protection Agency. "What we heard is that this standard will create green jobs. This is what the consumer wants. This is where the companies want to invest. So, overall, it's been very positive."
Other supporters for the
new CAFE proposal
by the Obama administration include 13 major automakers, such as Ford Motor Co., General Motors, and Chrysler; United Auto Workers (UAW), and environmental groups like the National Wildlife Federation.
"These proposed rules will reduce the pollution that contributes to climate change, significantly reduce America's dependence on foreign oil and save American families money at the pump," said Bob King, UAW President, who added that the proposal could save customers around $4,000 over the life of the vehicle. "They will also create jobs in the auto industry and throughout the economy."
"This proposal provides our industry both a single program moving forward, as well as regulatory framework that enables manufacturers to plan and invest for the future with confidence," said Sue Cischke,
Ford Motor Co.'s
vice president of sustainability, environment and safety engineering. "We are committed to working with you to finalize these regulations. The standards proposed are aggressive, but so are the demands from our customers for greater fuel efficiency."
Others, such as Volkswagen AG and Daimler AG, are on Chalmers' side with opposing the new CAFE proposal. They say the new proposal offers "no new incentive for diesel cars."
The hearing for the proposal was one of three that will be held to give the public a chance to comment. The other two are scheduled for January 19 in Philadelphia and January 24 in San Francisco.
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