Final Inspection

No Such Thing as Free Ride

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A coalition of environmental groups is calling on President Obama to “create long-term relief for drivers at the pump” by enacting new regulations requiring auto makers to hit a fleet fuel-economy average of 62 mpg (3.8 L/100 km) by 2025.

But let’s be honest. While reducing the country’s dependency on oil is a worthwhile goal, it really has little to do with saving consumers money.

No matter what happens with the next round of U.S. corporate average fuel economy standards, owning and driving an automobile is going to become a more expensive proposition for Americans. And that’s probably something both consumers and auto makers are going to have to get used to.

In lobbying Obama to enact the highest CAFE bogey currently under consideration, the groups say the move would save an average family some $513 over a typical summer of driving, based on $4-per-gallon gasoline.

But at what price? The government estimates it would cost auto makers about $3,500 per vehicle to meet the 62-mpg standard – about seven summers of savings under the environmentalists’ modeling. And that’s the conservative estimate. Others peg the tab closer to $10,000, suggesting the industry would need to rely heavily on expensive electrification to meet such an extreme mileage goal.

With the rapid run-up in gasoline costs the past couple of months, we’re already seeing the impact on vehicle prices. Kelley Blue Book reports used hybrid vehicles cost about $2,500 more since the beginning of the year, and used conventionally powered subcompact cars have jumped $2,000, hikes it attributes to tight supplies and higher gasoline costs.

Auto makers also are getting more for each new fuel-efficient vehicle they sell. Small-car inventories are at 36 days’ supply and midsized models have just a 42-day stock, according to Ward’s data, well below the 60-day target considered ideal. That’s squeezed down incentives and allowed transaction prices to rise.

Continuing the push for higher mileage is a noble endeavor. Increasing the fuel efficiency of new vehicles and encouraging people to buy them should be the No.1 goal of any U.S. energy policy.

But don’t try to sell tougher CAFE standards as a money saver for consumers – long-term or otherwise.

It’s a bigger financial burden to buy a new, fuel-thrifty car than to spend a bit more every week putting gas in your 7-year-old guzzler.

Whether tougher fuel-economy standards, higher pump prices or a combination of the two, someone is going to be asked to pay.

Consumers, likely destined to pitch in more at the pump, dole out more at the dealership and watch their tax dollars subsidize sales of advanced-technology vehicles, shouldn’t count on government regulators to bail them out.

And environmental lobbyist shouldn’t try to tell us they will.

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What's Final Inspection?

WardsAuto editors share insights and observations on the global auto industry.

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Dave Zoia

As Editorial Director, I oversee much of what goes into WardsAuto.com, enjoying a ringside seat that lets me observe up close just about every facet of the industry worldwide. I have covered the...

James M. Amend

James Amend is an associate editor at WardsAuto.com, covering day-to-day business and product news at General Motors. He also leads coverage of regulatory and environmental issues, as well as the...
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