Automaker Alliance Asks Feds To Lighten Up On Proposed NHTSA Regulations
July 3, 2008
Automakers from the US, Japan and Europe are encouraging the Federal government to reduce its mandate to increase fuel economy standards by 4.5% each year through 2015. The current proposal offered by NHTSA would require automakers to adhere to fleetwide averages of nearly 36 mpg for passenger cars and nearly 29 mpg for light trucks starting in 2011.
In a 77-page response crafted by the Alliance of Automobile Manufacturers, automakers called the regulations excessive and said that they go beyond what is technologically and economically practical. The group, which consists of GM, Ford, Chrysler, Toyota, Daimler AG, BMW, Mazda, Mercedes Benz, Porsche and Volkswagen, says that implementing the proposal would result in the loss of about 82,000 jobs and would reduce vehicle sales by nearly one million units through 2015. The response also indicated that it would cost the alliance about $29 billion to implement by 2015 and would increase the consumer cost of a light truck by $4,000.
NHTSA released the proposed standards in April and acknowledged that the implementation costs would be high, but estimated that the move would create 8,000 jobs. The report was also based on the assumption that gas prices would remain constant at about $2.50 per gallon. By adjusting the report to use higher fuel cost estimates, NHTSA would need to make its proposal even tougher.
To meet the existing CAFE regulations, automakers are introducing hybrids and alternative fuel vehicles to their fleet, at a significant premium over non-hybrid models. While some consumer segments are not cost-sensitive, less than half of all auto buyers would be willing to pay $5,000 more for a hybrid vehicle, according to a recent JD Power and Associates study. Automakers are concerned they will need to increase the number of hybrid and alternative fuel vehicles, which would increase the overall average cost for their fleet and reduce buyer interest across the board. The increased cost of a new vehicle may also spur consumers to keep older, less efficient vehicles that produce greater carbon emissions on the road longer and would serve to delay, rather than accelerate, the development of cleaner, more fuel-efficient vehicles.
Source: Detroit News
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