NADA Chairman Voices Concerns Over CAFE Rules

Following recent hearings regarding the proposed Corporate Average Fuel Economy targets set to begin in 2017 and culminating in a mandated “54.5 mpg” by 2025, the National Automobile Dealers’ Association has expressed strong warnings against the federal efficiency standards.

The NADA’s concerns – over what would actually equate to low 40 mpg range on the window sticker – come despite the proposed CAFE rules being supported by a number of automakers as well as the United Autoworkers Union.

As the NADA has contended previously, it is reiterating that strict mpg and emissions mandates could drive up the unit cost of vehicles enough that a significant number of new car buyers will essentially be priced out of the market.

According to NADA’s incoming chairman Bill Underriner, the EPA’s projection that its CAFE goals would add at least $3,000 to the price of each new car and truck is much too low.

In January, the NADA had said it could be as high as $5,000 per car, but now Underriner has said some predict the real cost could be as much as three times this amount – as high as $12,000- $15,000 per car.

If this proves to be the case, then according to undisclosed data findings cited by Underriner, some 7.5 million Americans would no longer be able to afford a new car.

“That means 7.5 million fewer people in our showrooms,” he said. “We already know what that’s like. We’ve lived that nightmare, we don’t want to repeat it.”

Fewer buyers would therefore mean fewer profits for dealers, something Underriner expressed during the convention’s closing speech on Monday, Feb. 6.

“If government policy is going to shrink our customer base, shouldn’t we be concerned?” he said. “NADA is fighting this fight because we want the days of empty showrooms to be long gone.”

Now while it would be easy to assume that NADA isn’t in favor of increasing vehicle efficiency, Underriner was quick to point out that the association has long been an advocate of improvements in fuel economy – it’s just that NADA wants a full and fair public debate on the proposal.

In addition, Underriner said that before moving to the next step, it would be wise for both the auto industry and the government to analyze the impact of the latest fuel economy regulations, which came into effect in 2011.

Although he calls for debate, it appears clear that Underriner has already made up his mind, and it remains to be seen whether he can be convinced that CAFE won’t be a government-mandated boondoggle.

Underriner has also gone on record saying he believes that once adopted, CAFE standards will force many motorists to hang on to their older vehicles, because they won’t be able to afford newer ones.

“How many people will decide to keep their old vehicles?” he said, “and in doing so, defeat the proposal’s fundamental intent to increase fuel economy?”

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  • Capt. Concernicus

    “In January, the NADA had said it could be as high as $5,000 per car, but now Underriner has said some predict the real estimate could be as much as three times this amount – as high as $12,000- $15,000 per car.”

    —You mean a base Prius C could go from costing $19,000 to costing as much as $34,000 by 2025? I think someone has been putting a different kind of “tobacco” in his pipe lately. Does that increase include inflation? I just remember when Ford decided to put it’s ecoboost engine in their F-150’s. People out there said no one would spend the extra money (which ended up only being $700 or so extra) for the engine in that truck. Yet the ecoboost made up some 40% of all F-150 sales.

    I think the NADA chairman is crying wolf for no reason.

  • AP

    The numbers here aren’t much exaggerated. It’s easy to think you can just “snap your fingers” and make cars get twice the fuel economy, but someone actually has do do it, and pay for it.

    You would not believe how many design and material changes will be necessary to meet the upcoming CAFE standards, and what compromises there will be in convenience and drivability. Overcoming these issues drives more expensive materials, more complexity, and more manpower to design and produce. All this will have to be passed on to the consumer.

    There is a real possiblity that people won’t be able to afford these cars, so people will drive their lower fuel economy vehicles longer, reducing the benefit of the new rules.

  • Capt. Concernicus

    I’m sorry, but I fail to believe the NADA chairman and his outlandish claim that car prices will rise $12-15k based solely on rising fuel economy standards. Maybe if certain car companies would have invested their monies in the past more wisely they would have laid the groundwork down to an easier transition to higher MPG’s in their cars. You know who you are.

    I just don’t feel sorry for automakers out there that won’t be able to make that number by 2025. The hybrid Camry already makes 41mpg combined. So in the next 13 years Toyota will have to increase it by 15mpg. I think Toyota can do that and I don’t think it’ll cost the consumer an extra $12 grand or more for each hybrid Camry.

  • CharlesF

    Capt. Concernicus, the hybrid Camry already makes the new standard. 54.5 CAFE MPG is about 40 EPA sticker MPG. As does the new Fusion hybrid. The old Fusion hybrid got really close. The hybrid premium for the Camry is about $3,000. I do not see how the NADA can say with a straight face anything over $4,000, even with their bias views. Smaller cars (33 MPG combined today) maybe able to get by with adding stop/start technology, a CVT and a bit lighter weight. EVs and plugin hybrids will beat the 40 MPG rating by a lot, allowing the car manufactures to sell a lot of SUVs and trucks and still meet the CAFE standard.

    Please remember that 54.5 CAFE MPG is only 40 EPA sticker MPG.