Fuel Economy Great, Extra Cost Isn’t, Says NADA Chairman
“My customers are looking for cheap cars,” says the head of the National Automobile Dealers Assn.
LAS VEGAS – National Automobile Dealer Assn. Chairman Bill Fox is all for better fuel economy. But he’s not keen on potentially taking millions of car consumers out of the market because of a regulatory fuel-economy mandate.
That’s how many people could defer buying a new car because they can’t afford the advanced technology needed to achieve escalating mileage targets set by the federal government, he says.
The government wants automaker fleets to achieve an average fuel economy of 54.5 mpg (4.3 L/100 km) by 2025.
NADA estimates that would cost an additional $3,200 per car. “Who’s going to pay that? The consumer,” Fox says at the annual F&I Industry Summit here.
He co-owns an eight-franchise family dealership operation in Auburn, NY, between Rochester and Syracuse, a part of the country that’s struggling economically. “My customers are looking for cheap cars. They don’t have a lot of discretionary income.”
One way to achieve corporate average fuel economy (CAFE) goals is for automakers to include in their lineups hybrid, plug-in hybrid and electric vehicles.
But so far, those haven’t sold particularly well. For instance, EVs account for 0.37% of market share compared with 94.9% for gasoline-powered vehicles, according to WardsAuto data.
“You can’t force cars on consumers,” Fox says. After his conference address, he speaks with WardsAuto.
WardsAuto: Do you think the government will budge on the mandate for 54.5 mpg by 2025?
Fox: There’s a review coming up in 2017, so it’s still not conclusive. Will they budge? It depends on who the president is, and what the economy is.
WardsAuto: You mentioned the extra cost for the technology needed to achieve better fuel economy. Do you think that cost would go down as the technology becomes applied more on a widespread basis?
Fox: I don’t see prices going down on cars ever.
WardsAuto: But what about technology costs ultimately going down?
Fox: Well, yeah, the technology costs will level off, but we are still going to have to get there. And another factor in that is how durable will the products be. We have 9-speed automatic transmissions going into relatively small cars. Some transmissions are constantly searching for the right gear and right horsepower.
WardsAuto: You’re referring to continuously variable transmissions.
Fox: Yes. All that is new, and we don’t know what it’s going to bring.
WardsAuto: What was it you said about hybrid cars such as the Toyota Prius not being viable in certain markets, such as rural areas?
Fox: I said, “You can’t haul hay in a Prius.” I mentioned that to a senator from Kansas.
WardsAuto: That must have resonated with him.
Fox: I figured he would understand that. He looked at me and said, “Oh.” Pickup trucks are made for some people, and not everyone can own a little hybrid car that gets 50 miles (4.7 L/100 km) to the gallon.
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