NADA Warns of Impending Sticker Shock

Cafe sticker
Making fuel-efficient cars isn't cheap, and a new study warns that consumers are going to end up paying a lot for them. According to a National Automotive Dealer Association study, new government fuel-economy requirements are going to cost consumers a lot of cash and make it tough for many new-car shoppers to afford one. The NADA study warns that consumers will be paying around $3,000 more for a new vehicle once the proposed corporate average fuel economy standards take effect.

The Obama administration's proposal would double current CAFE standards to 54.5 mpg by 2025, up from 27.3 mpg today and 35.5 mpg by 2016. They are expected to be phased in starting in model-year 2017, but NADA is concerned that the price increase will make it harder for lower-income bracket consumers to qualify to finance the more expensive vehicles. The group’s study warns that the proposed rules will cut millions of potential new-car buyers out of the market in 2025.

"While EPA and NHTSA can mandate what automakers must build, no one can dictate what customers will buy. If our customers do not purchase these products, we all lose. NADA supports fuel-economy increases as long as they take consumer demand and vehicle choice into account," said Don Chalmers, New Mexico Ford dealer and chairman of NADA’s Government Relations Committee, in a statement.

The National Highway Traffic Safety Administration, meanwhile, estimates that the new standards will save consumers up to $6,600 in total fuel savings over the life of the car. The regulations, NHTSA said in a statement "will help to address our country's dependence on imported oil, save consumers money at the pump and reduce emissions of greenhouse gases that contribute to global climate change."

By Jennifer Geiger | April 17, 2012 | Comments (2)

Comments 

Chris K

Before anyone goes bonkers about cars getting $3K more expensive, consider that the National Automotive Dealer Association has a huge vested interest in auto sales (obviously), so you can't really take a study they did or commissioned at face value due to their vested interest.

We hear this argument every time some new form of safety or efficiency regulation is created, and nobody has stopped buying cars yet.

My opinion is that the price increases will hit certain vehicles more than others. Most hard-hit will be highly profitable SUVs and large cars, which tend to get poor fuel mileage. (That might be the concern of NADA in a nutshell.) More efficient cars will be much better off.

If someone with a low income is buying a new car (and lets not get in to THAT discussion), it's likely going to be a smaller, more efficient car like a Focus or an Elantra. They won't be the ones buying an Expedition and complaining about CAFE standards increasing the price of their new truck.

Thuta

Fully agree with Chris K's comments.

Moreover, increased fuel efficiency or not, the prices of new cars keep increasing anyway, so what's the big deal.

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