Growing?

AutoWeek reports: Compliance Question. The CAFE (corporate average fuel economy) rules have been announced recently and, like many sites have pointed out, they're lame. The very simplistic summary of the new rules: Bigger trucks get a bigger break, and cars aren't required to get any better mileage at all. The average for cars stays at a crappy 27.5. It's 2006 (even though some 2007s are being sold)! The best that can be done for passenger cars is 27.5 mpg? We're disappointed in our government for not pushing manufacturers to "raise the bar," and we're equally disappointed that consumers haven't made it a bigger issue. We'll hold off our (continued) disappointed of (most) manufacturers until we see if they make bigger vehicles rather than improve fuel economy. What do we mean by that?

For example, the rules set a target for the Hummer H3 of 24.16 mpg by the 2011 model year. That's 4 mpg more than the EPA estimate of the H3's current fuel economy. Such an improvement likely would require changes in the H3's powertrain, aerodynamics and weight.

But if Hummer were to add two inches of track width and four inches of wheelbase to the H3, the vehicle's fuel economy target would drop by about 1 mpg.

It will be interesting to see how this plays out. We firmly believe gas is going up in price for good (no more $2/gallon) so will manufacturers build bigger vehicles to skirt the rules? Will consumers buy those vehicles? We're not exactly sure what will happen, but we wouldn't be surprised to see bigger vehicles made. The timing of these new CAFE rules is kinda interesting, too, since there seems to be a sub-compact car race a-brewin'. Will GM and Ford increase truck size as Toyota and Honda push small dealies?

Comments

[Ames Tiedeman]

Awesome blog!

[JD]

CAFE is systemically broken. I agree in concept that commercial vehicles (ex. bus, tractor-trailer, etc.) should be exempt. Unfortunately, an arbitrary weight or size limit only encourages extremely larger vehicles.

There are only ways I can see around this:

1. Exempt only vehicles that couldn't possibly be used as personal transportation, or hold more than a certain number of passengers (nothing less than 9). This would probably be dead on arrival, since it would start including many large pickups and SUVs currently used by businesses.

2. Allow ANY car or truck be registered as commercial. The SSN or Fed Tax Id of the purchaser be collected and reported to IRS along with the VIN. If that car is not depreciated on somebody's tax return, it counts towards CAFE.

Neither of these would be perfect, and the latter would create some new bureaucracy, but both consumers and automakers have proven they do not really care about fuel efficiency.

I personally would like to see a significantly higher tax on gas and let the market sort out the rest. It is a much simpler solution than some overly complicated, bureaucratic spider web of regulation to "encourage" higher fuel efficiency.

[Nate Wesley]

As long at the 'commercial vehicle' loopholes exist, look for the Big Three to continue exploiting them.

As for getting in the small car battle, I doubt either are going to do much about it. GM does have it much better than Ford does, however...the Cobalt ought to contend on price and it's customization potential from younger buyers. The new Aveo could fight the low-buck offerings from Hyundai and Kia.

Ford? Nothing but the Focus, and there's not any word that we'll be getting a new wrinkle to its repoirtoire anytime soon.

[Nate Wesley]

As long at the 'commercial vehicle' loopholes exist, look for the Big Three to continue exploiting them.

As for getting in the small car battle, I doubt either are going to do much about it. GM does have it much better than Ford does, however...the Cobalt ought to contend on price and it's customization potential from younger buyers. The new Aveo could fight the low-buck offerings from Hyundai and Kia.

Ford? Nothing but the Focus, and there's not any word that we'll be getting a new wrinkle to its repoirtoire anytime soon.