Group says steep CAFE hikes would come at great cost

  • 21-Jun-2011 08:23 EDT

The Center for Automotive Research (CAR) in Ann Arbor, MI, says the average increase in vehicle price automakers would need to charge for compliance with long-term corporate average fuel economy (CAFE) mandates that are now being considered by the U.S. government range from $3700 to more than $9000. The government is considering annual increases between MY2017 and 2025 of 3 to 6%, for a final-year CAFE standard of between 45 and 62 mpg. In most scenarios, the additional vehicle cost would be more than the amount of money consumers would save over a five-year period due to better fuel economy—even with gasoline retailing for $6/gal. CAR researchers predict that, rather than pay the much higher vehicle prices under any of the scenarios, many consumers will hold onto their vehicles longer. That would translate into fewer new-vehicle sales and fewer automotive jobs. The U.S. Environmental Protection Agency and National Highway Traffic Safety Administration this fall are expected to formally propose CAFE standards for MY2017 to 2025. CAFE standards already have been adopted to MY2016.

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