Behind Automakers’ Petulant Resistance to Higher Car Mileage Standards

Every time the government proposes legislation to improve fuel economy standards, you can practically hear a collective groan from the automobile industry.  In early July 2008, automakers made a big fuss over proposed new mileage standards, saying they’re too tough.  The new standards would require automakers’ fleet of cars to meet an average of 35.7 miles per gallon for passenger vehicles and 28.6 mpg for light trucks by 2015.

This will be the first time the National Highway Traffic Safety Administration has raised its ‘Corporate Average Fuel Economy standards’ (CAFE) since 1985, which is really appalling in itself.  That’s more than 20 years that automakers could have been working on better, more efficient cars.  Instead, they spent that time developing gigantic sports utility vehicles and heavy duty trucks, leading up to a rather sickening pinnacle in recent years with the Hummer.  What’s more, the agency’s mileage standards assume gas prices of $2.42 per gallon in 2016.  What parallel universe are they living in?

Meanwhile, many consumers feel the new standards would be far too lenient.  The Consumer Federation of America wants the standards raised well over what the government has proposed, to 39.5 mpg for passenger vehicles and 30.9 mpg for light trucks.

Even that’s not good enough.  After all, it’s obvious that car companies can easily reach these standards, and far sooner than 2015 – and what’s 35.7 miles per gallon if gas is completely unaffordable or not available at all? Those of us who rely on personal or family vehicles to get around want the auto industry to step up to the plate and start getting innovative.  Challenging times fuel innovation, and it seems like we should be seeing leaders in the industry eagerly savoring this chance to really show us what they’ve got.

What reason is there, we wonder, for automakers to drag their feet like bratty, fit-throwing children on raising mileage standards?  Why aren’t they leading the charge toward the future, with cars that meet and even exceed customers’ desires for greener, more energy-efficient vehicles?

Part of it is fear.  They’ve made good money off the market as it has been for the last two decades. They’ve built their companies around the assumption that they could continue operating like that indefinitely. Completely restructuring their businesses around making more fuel-efficient vehicles will cost them.

Their biggest excuse is that ‘it’s not feasible’.  But, that certainly seems like a weak argument when hybrids as they are today are already more efficient than the proposed standards and are set to become even more efficient as improvements to the batteries and drivetrain systems continue to be made over the next few years.  Plug-in technology is well on the way.  Other alternatives to fossil fuels are being researched and developed at this very moment, and who knows what else could crop up.

Even without raised CAFE standards, automakers will be forced to green up.  They don’t have much choice anymore. High gas prices will undoubtedly be a great catalyst for improved fuel economy, simply because automakers no longer have a choice, regardless of how they feel about the new standards. Having low gas prices for so long encouraged automakers to keep on producing huge, gas guzzling vehicles, and encouraged consumers to buy them. Over the last few decades, car companies grew to depend upon sales of SUVs and trucks as a large part of their profits.  Now, they’re being forced to reevaluate the entire industry.  That’s because consumers have dropped SUVs and trucks like they’re radioactive.

High gas prices, in effect, forced consumers to take responsibility for their share of the problem: they’re now clamoring for smaller vehicles. Consumer desire for big cars and trucks was the biggest obstacle car companies would have faced in making their fleets more fuel efficient, so the rest of the onus is on them.  That doesn’t mean that we’ll never have affordable SUVs and heavy duty trucks again – it just means that most of us can get by on smaller, lighter cars during this shift toward cleaner energy.

One thing that will likely happen during the shift to more fuel-efficient vehicles is that prices will rise a bit for consumers.  Without those SUV profits, automakers will be forced to raise prices on their current lines of compact cars as well as new models that debut in the next few years.  While consumers will have to swallow those price increases up front, the vehicles will be less expensive to run over time.

The funny thing is that the Big Three automakers – GM, Ford and Chrysler – have seen huge drops in profits because they failed to anticipate this shift toward smaller, more fuel-efficient vehicles.  Strange, when it seems as though everyone else could see it coming from miles away, but perhaps they were too busy rolling naked in money, luxuriating in the profits brought to them courtesy of low gas prices and at the cost of the environment.  It almost seems as though they’ve engineered their own downfall, and they’re just now starting to realize it as plants close and thousands of workers are laid off.

GM, for one, is finally accepting reality and said just yesterday afternoon that they’re prepared to make hard choices in order to survive.  They plan to sell off $4B – $7B worth of assets in order to afford upcoming changes to their product line.  We hope to see more of that in the upcoming months.  The loss of jobs is, of course, very unfortunate, but hopefully those people will be able to become a part of the new, greener industries starting to sprout up.

The times, they are a-changin’, and the auto industry is going to have to change with them, just like everybody else, like it or not.  The only way out is through.  As we all try to find our way out of the Era of Oil and into a better, greener future, it’s going to be a bit painful for everybody, but there’s no doubt that it will be worth it in the end.

Link [CNN]
Photo credit: Make Your Own Gas Station Sign

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