NADA: Overly Aggressive Fuel Economy Push May Be Counterproductive



DETROIT (Oct. 21, 2010) - As the debate over fuel economy heats up, the National Automobile Dealers Association (NADA) is urging federal regulators to consider carefully the rising cost of vehicles for consumers when increasing new federal mandates.

“NADA has long supported improvements in fuel economy, but it's also our role to raise some tough questions so there's no rush to judgment,” said NADA Chairman Ed Tonkin, in remarks today to the Automotive Press Association in Detroit.

The Environmental Protection Agency and the U.S. Department of Transportation have circulated a proposal to dramatically increase fuel economy standards to more than 60 miles per gallon by 2025.

“We would all like to believe consumers would be willing to pay whatever it takes to reach such a worthy goal. But will they? Or is this another example of getting ahead of the consumer, pushing too far, too fast? Will huge numbers of consumers be priced out of the market?” Tonkin asked.

Tonkin, a multi-franchise dealer from Portland, Ore., called the consumer “the most important person in the auto industry” and said, “the most important factors for a car buyer are overall price and monthly payment.”

“Nothing happens without a buyer,” Tonkin added. “My job is to try to match supply and demand every single month everywhere I have a dealership. And this is true of every dealer in the country. Consumer demands vary from market to market. And consumer preference always prevails.”

Tonkin said when it comes to buying cars and trucks today, American consumers shop for convenience, predictability and affordability, and that fuel economy is not always a top priority. Advanced technology must be affordable, while keeping transportation accessible to all Americans, he added.

“We are cognizant of the ripple effect of higher [vehicle] prices,” Tonkin added. “The risk is: if these fuel economy regulations are overly aggressive, it will price Americans out of the market. The same is true for credit.”

During the recent financial services fight, Tonkin said NADA's mantra in Congress was to “keep auto credit affordable and accessible.”

“Despite huge odds against us, we prevailed because a majority of both the House and Senate recognized the automobile is a necessity of modern life,” he said. “[The automobile] is an essential building block of the U.S. economy.”

Tonkin said while the debate over fuel economy and credit issues moves forward, NADA will work to ensure that car buyers have access to affordable credit and affordable transportation, and that “our hope is regulators will listen to reasonable arguments and address legitimate questions, just as Congress did.”

“We all hope there is some future technology that's affordable and will get us to 60 MPG sooner than later. We all hope greater fuel economy will reduce our dependence on foreign oil. And we all hope advanced technology will further cut greenhouse gases,” Tonkin said. “But we have to look beyond hope. Public policy has to take into account the harsh realities of the marketplace.”

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