A government proposal that would dramatically increase fuel economy could hurt the auto industry and drive many price-sensitive buyers out of the market, 2010 National Automobile Dealers Assn. Chairman Ed Tonkin says.
The industry's recovery is real, “but let's not throw up a roadblock,” he says at the opening session of NADA's annual convention.
As auto makers, federal policy makers and environmentalists get ready to craft the next round of U.S. corporate average fuel economy, Tonkin raps an Environmental Protection Agency's proposal to improve fuel-economy by as much as 62 mpg (3.9 L/100 km).
“That raises a lot of questions,” he tells the dealer audience. “Can it even be done? At what cost? Will we force consumers out of the market? Is it another government attempt to change consumer behavior?”
The most important person in the auto industry is not General Motors Co. CEO Dan Akerson or Chrysler Group LLC CEO Sergio Marchionne, “It's the consumer,” Tonkin says, adding many car buyers are not in a financial position to spend extra money for cars with advanced technologies that improve fuel efficiencies.
“Make sure you really know what the consumer wants,” he says of government environmental efforts that focus on auto makers adding more electric vehicles to their lineups.
Auto makers currently are working on efforts to achieve a government-ordered fleet-wide fuel economy of 35.5 mpg (6.6 L/100 km) by 2016. Increasing that to 62 mpg in 14 years would hurt vehicle sales and cost 1.5 million jobs, Tonkin says, citing a recent study.
“Hybrid technology adds $5,300 to the price of a vehicle. Just imagine what 62 mpg vehicle would cost,” he says. To achieve such fuel efficiencies, even mainstream cars could cost $30,000 to $50,000 — more than many consumers can afford.
He hastens to add dealers aren't anti-environment. “Dealers have long supported improving fuel economy, but we also know it must be based on sound public policy and not just wishful thinking.”