Asian Brands Complain That New CAFE Rules Favors Trucks, Detroit
When the White House opened negotiations over the next round of CAFE regulations for 2017-2025, I reckoned the automakers and regulators were “working in nearly unprecedented harmony.” Well, not so much any more. The WSJ [sub] reports that, although work on “the big number” is proceeding well, in the words of IHS Automotive’s Michael Robinet
This becomes a lot more politically divisive as they become much more specific in terms of the footprint of the vehicle.
In short, the original sin of CAFE, the two-tier system that drove SUV “light truck” sales and saw the creation of “trucks” like the PT Cruiser and HHR, has returned to haunt the latest round of negotiations. And, according to the WSJ, Japanese and Korean manufacturers are complaining that the new rules will motivate consumers to buy less-efficient offerings, and in turn give the Detroit manufacturers an unfair advantage. The kumbayas are over, and the gloves are off… but just how unfair are the newly-proposed rules?
Historically, U.S. fuel-economy requirements, while intended to push auto makers to build more fuel-efficient cars, instead helped spawn the SUV craze of the 1990s as U.S. auto makers pushed more of their fleets into the “light truck” category where rules were more lenient.
Now, however, auto makers must hit targets both by segment and for their overall U.S. vehicle fleets, with standards tied more closely to a vehicle’s size. The new standards being floated by the Obama administration—which would roughly double the fleet target to 56.2 miles a gallon by 2025—revise the scale that determines targets for each vehicle segment.
A small SUV such as Honda’s CRV, for instance, would need to improve fuel efficiency by several miles per gallon in 2017 model-year vehicles, and then make smaller additional improvements every year until 2025. The biggest trucks, such as some of Ford’s F-Series pickups, won’t face an increase until 2020. After that, they would need to make improvements every year through 2025. The bigger the truck, the more time will be allowed for auto makers to improve miles-per-gallon figures.
Because the proposal is still being negotiated, that’s as detailed as we can get for now, but it’s clear why the Hondas and Hyundais of the world aren’t happy with these broad strokes. More to the point, because every MPG of improvement in vehicles with the worst fuel economy save more fuel than the same improvement in a more-efficient car, the Asian brands have a point when they argue that this approach is counter-productive. After all, the Obama Administration’s stated goal is “saving families money and reducing dependence on oil.” So why go easy on the light trucks, which have the highest consumption levels?
Federal regulators are looking to give more leeway to larger trucks because they feel those vehicles required greater improvements than their smaller counterparts in the last round of changes to fuel-economy regulations, two people familiar with the administration’s thinking said.
The debate is still wildly ambiguous, based as it is on complex formulas that have yet to be publicized. But with automakers and regulators meeting daily now to push out a new standard, we should have a better sense of the direction things are going in the coming days and weeks. But because the government still partially owns GM and Chrysler, expect a strange coalition of environmental groups, foreign-based automakers and anti-bailout Republicans to push hard against any perceived attempt to favor Detroit in the new regulations. After all, trucks and SUVs, not to mention Detroit’s historic dependence on them, are highly-charged symbols of inefficiency and uncompetitiveness. Stacking the deck to keep trucks cheap and thirsty, if indeed that’s what this proposal does, will not be looked kindly upon by history.
More by Edward Niedermeyer
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Honestly, I think this is whining without much reason for that. For the Asian vehicles that qualify, they are going to be held to the same standard. For the American models that don't qualify, they have to be ready for the earlier dates as well. I see it this way. The standard (judging from what I have read) will have mpg requirements based on size. You know, like how many vehicles today, mpg varies based on the size of the vehicle. Bigger vehicles will be harder to make meet the new standards. Not a shock there. But, it will have to be done. Also, companies are going to price the vehicles according to size like it done today. I don't expect an F150 to cost less than a Fusion, Focus, Flex, or Explorer. Also, while trucks like the F150 are big sellers, far more people are choosing crossovers today. They get better mileage, drive better, and meet people's needs better. I don't have the numbers in front of me, but I am betting that crossovers are selling in higher total numbers than BOF trucks right now. Think about all of the Lamdas, Highlanders, Pilots, etc that you see on the road. There are a ton of them. More than trucks... and I live in Texas. Depending on what gas prices do in the future, which is likely to go up and go up a large amount, the more fuel efficient vehicles are going to sell much better. The complaints here are pretty dumb. Also, this is a 3 year difference. Not even an entire model lifetime. Most are on 5 to 6 years plans. If the Asian makers, especially Toyota, are smart, they would have their vehicles ready to go ahead of time. It would look better if the Tundra would be getting really good gas mileage numbers while the Silverado and F150 were only ok numbers.
Toyota (the brand) has more trucks and SUV's than any of the 'domestics'. If any make is favored by the lax CAFE standards it's them.