Auto Dealers Would Face Brunt of Burden Under California Fuel Economy Rules



WASHINGTON (March 5, 2009) - The chairman of the National Automobile Dealers Association, John McEleney, told the Environmental Protection Agency today that complying with state-based fuel economy regulations would cause additional hardship on the nation's declining number of new-car dealers with little environmental benefit.

McEleney's comments came in testimony (available here) at a public hearing held by the EPA as it reconsiders the request of the California Air Resources Board (CARB) and more than a dozen states to establish their own fuel economy and greenhouse gas programs. McEleney, a multi-franchise dealer in Iowa, described the California approach as “inherently flawed.”

“Implementing a patchwork of state fuel economy regulations would ultimately pass much of the burden of compliance onto the dealers,” McEleney said.

He predicted that the California approach would force automakers to ration certain popular large models, which would ultimately lead manufacturers to pressure dealers to accept vehicles that their customers may not want to buy. California bases compliance on what vehicles are delivered to a dealership and not what consumers actually demand or ultimately purchase.

“If you look at it closely, the CARB scheme just doesn't make sense,” McEleney said. “CARB's regulation exempts any manufacturer that sells less than 60,000 vehicles in California on average for three years. This leaves a large swath of the industry unregulated and would even let Hummer off the hook if it were sold and operated as an independent company.  

“If the goal is to significantly reduce greenhouse gas emissions and our country's dependence on foreign oil, then CARB's fuel economy plan would not be as effective as a single, national fuel economy standard,” McEleney added.

Since 2005, CARB has sought a waiver from the EPA that would permit California, 13 states and the District of Columbia to regulate vehicle fuel economy. Such a waiver was denied by the EPA last year.

McEleney noted that there has been almost no national analysis or scrutiny on how CARB's rule would actually work in practice, or why such regulation is even necessary since Congress increased the national fuel economy standard by at least 40 percent in 2007.

Hummer is a good example. About 5,000 Hummers are sold each year in California. General Motors has announced its intent to sell the Hummer brand. If the buyer of Hummer doesn't already sell more than 55,000 vehicles in California, then Hummer would be exempt from meeting CARB's rules until 2016.

“Hummer, if it became an independent company, would not be regulated at all under the California plan or in any other state,” McEleney said.  

“In contrast, a single, national fuel economy standard requires all automakers to increase fuel savings and thus more effectively reduce greenhouse gas emissions,” McEleney said. “The American economy is fragile. This is not the time to be taking unnecessary regulatory risks.”

Double Regulated Under Calif. Regs.
BMW, Chrysler, Ford, Honda, Nissan, Toyota and General Motors

Expected to be Exempt from Calif. Regs.    
Audi, Hyundai, Isuzu, Jaguar, Kia, Land Rover, Suzuki, Volkswagen and other high-end luxury brands

May Soon Be Exempt     
Chinese automakers, Indian automakers,  Daimler, Saturn,* Hummer,* Volvo* and Saab*   

* If sold to an operator selling a total of less than 60,000 vehicles on average in California

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