Car Buyers Need More Information to Understand, Appreciate Fuel Economy Benefits

COMMENTARY

Underriner
2012 NADA Chairman
Bill Underriner — February, 2012

Late last month NADA directors Don Chalmers of New Mexico, Bill Willis of Delaware and Forrest McConnell of Alabama represented the association and dealers nationwide at three public hearings on proposed fuel economy rules for model year 2017-2025 passenger cars and light-duty trucks. Their testimony centered around one theme: affordability. In other words, how will the new rules affect Americans’ ability to buy the types of cars and trucks manufacturers will be required to build? Will consumers be priced out of the market? And will they be able to secure financing?

Chalmers, who also serves as chairman of NADA’s Government Relations Committee, summed it up to a Wall Street Journal reporter this way: “Doesn't matter if beans are a nickel a bushel, if you can't get the nickel you can't get the bushel.”

The affordability argument has been at the center of NADA’s stance on fuel economy since the nation’s first CAFE standards were passed in the 1970s. But it’s become even more important now, as the Obama administration, federal regulators and environmental groups continue to argue that consumers will see significant “payback” in fuel savings from more efficient vehicles over time. That may be true for some, but as Willis testified to the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA), “When prospective purchasers come to my new vehicle showrooms, they rarely, if ever, engage in upfront fuel economy ‘pay-back’ analyses.”

The reality is consumers first and foremost look for vehicles that meet their needs and that they can afford. And any “payback” they receive will depend on several variables, including the number of miles they drive and fuel prices. In the coming months, NADA will continue to raise significant concerns over how the federal government calculated vehicle cost under its new CAFE standards for 2017-2025. And, as Chalmers indicated in his testimony, initial analysis shows that the administration’s fuel economy proposal grossly underestimates costs – meaning actual retail prices may increase by as much as 60 percent.

That is a bushel none of us can afford.

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