Automakers Concerned About Consumers Going Along With New Fuel Efficiency Standards

Aug 28, 2012 3:16pm

Past consumer behavior has the auto industry reacting with “mixed emotions” to today’s Obama administration announcement of new fuel efficiency standards that will increase fuel economy to the equivalent of 54.5 mpg for cars and light-duty trucks by Model Year 2025, Gloria Bergquist, vice president of the Alliance of Automobile Manufacturers told ABC News.

At a campaign event in Ames, Iowa, President Obama heralded the new announcement, telling a crowd of students that “we developed new fuel standards, developed new fuel standards so that your car will get nearly 55 miles per gallon by the middle of the next decade. That’s going to save you money at the pump. That will reduce greenhouse gas emissions by a level roughly equivalent to a year’s worth of emissions from all the cars in the world.”

Environmental groups also cheered, with the Union of Concerned Scientists claiming that the standards will save consumers nearly $8,000 over the lifetime of the new 2025 vehicles, while reducing “global warming emissions by as much as 270 million metric tons in 2030–the equivalent of shutting down 65 coal-fired power plants for one year.”

The Alliance of Automobile Manufacturers issued a statement expressing some support. Bergquist said that members of her association – which includes not just American auto manufacturers such as Ford Motor Company and General Motors Corporation but also importers such as BMW Group and Toyota – are happy for the singular standard issued by the U.S. Department of Transportation and the U.S. Environmental Protection Agency (EPA).

“For years one of our top priorities was to have a distinct national standard,” as opposed to what the Alliance referred to in a statement as to the “conflicting requirements from several regulatory bodies raise costs, ultimately taking money out of consumers’ pockets and hurting sales.”

That said, Bergquist said, “these are really ambitious aggressive standards.”

Fuel efficient vehicles are already available in many instances, she said. “Consumers need to buy them. If they don’t we may well fall short” of the goals necessary for today’s standards to actually be feasible.

In addition to consumers buying fuel efficient vehicles in greater numbers, she said, clean diesel needs to become more available – it’s only in roughly half of U.S. service stations – as do charging stations. Half of new vehicles sold in Europe se clean diesel, she said, while in the U.S. that number is closer to two percent. Anecdotally, automakers are told by consumers that they would be more willing to buy clean diesel vehicles if the fuel were more widespread. “We see the same thing with electric vehicles,” she said.

For that reason, the automakers say they’re glad that the new rule includes an April 2018 “mid-term evaluation” where the government can thoroughly review marketplace conditions. “Our first choice is we want to sell them in high volumes,” she said, “but if that doesn’t happen for some reason we need to address that sooner rather than later so we can see what needs to be done to encourage consumers.”

The biggest driver of consumer behavior when it comes to cars “ultimately goes to the question of ‘What’s the price of gasoline?’” she said. “In Europe, the price is eight dollars a gallon and consumers are driving different vehicles.”

While noting that the financial industry underlines that past experience does not necessarily predict future success, Bergquist noted that hybrid vehicles have been on the market for approximately a decade, and today constitute only 2- 2.5% of vehicle sales in the U.S.

The new standards are “very, very challenging,” she said, while underlining, “we understand the need for greater energy security.”

-Jake Tapper

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