By on December 29, 2007

logo.jpgThe National Highway Traffic Safety Administration (NHTSA) sets Corporate Average Fuel Economy (CAFE) standards and collects fines from manufacturers who fail to meet their provisions. NHTSA recently updated their website with a list of CAFE fines the agency collected for model year '06 scofflaws. DaimlerChrysler's $30,257,635.50 penalty covers Mercedes models both imported and domestic, and represents an enormous jump from last year's cost of doing business ($16,895,472). In fact, the now defunct DaimlerChrysler's fine is the largest single amount NHTSA's ever collected, eclipsing BMW's massive penalty in 2001 ($27,985,925). That's not to say that BMW got off lightly for their '06 models; the Sultans of Stuttgart forked over $5,056,012.50 for not meeting the required fleet-wide federal mpg standard. BMW's whack just "beats" Porsche's '06 model year CAFE fines ($4,599,864.50). No wonder Porsche was trying to change the new law to get an exemption as a low volume automaker. Speaking of which, Ferrari shelled-out $842,160 to the feds for their fuel-sucking models' mpgs. As the new standards get tougher, the Germans and Italians are going to have work harder to make the grade, or dig deeper into their corporate coffers. Oh, and if you think about it, guess who really pays these fines? 

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24 Comments on “NHTSA Fines DaimlerChrysler $30,257,635.50...”


  • avatar
    crackers

    Who is actually going to pay the fine, Daimler, Chrysler or some combination? I’m sure Chrysler doesn’t need this right now.

  • avatar
    jkross22

    Where does this money go? Who is responsible for disbursing it?

  • avatar
    melllvar

    going to have work harder to make the grade, or dig deeper into their corporate coffers.

    … or charge more for their cars.

  • avatar

    Where does this money go? Who is responsible for disbursing it?
    Quite obviously, this money goes into government-funded research on new technologies to enhance fuel economy in vehicles. And it is the Easter Bunny who is charged with its disbursement.

  • avatar
    bleach

    crackers,
    It was probably addressed in the purchase and if paid by Chrysler reflected in what Daimler had to give Cerberus to take Chrysler of their hands.

    edgett,
    No doubt. It’s in some bureaucrat’s new boat or designer shoes like the DC official who stole enough to spend $1.5 million at Neiman Marcus.

  • avatar
    andyinsdca

    Can anyone explain why the National Highway Traffic SAFETY Administration has anything to do with CAFE?

  • avatar
    jthorner

    “Can anyone explain why the National Highway Traffic SAFETY Administration has anything to do with CAFE?”

    A bizzare quirk of federal law put the NHTSA in charge of this when CAFE was invented. The why I don’t know!

    It seems to me that it is time to up the ante on CAFE enforcement beyond fines. How about not letting them sell more cars?

  • avatar
    Gunit

    “It seems to me that it is time to up the ante on CAFE enforcement beyond fines. How about not letting them sell more cars?”

    It’s an interesting problem, and I think reveals the weakness of government mandated limits. Is Ferrari supposed to develop a econo car? Or Hummer, or Aston Martin? To be successful it demands that manufacturers become bland Toyotahomogenous type of corporations.

    There are better options, like eliminating foreign oil management; saves taxes, increases the cost of oil, together making alternative energy sources more affordable.

  • avatar
    BabyM

    Where does this money go?

    Probably a fair part of it went to West Virginia, to build something and name it after Robert C. Byrd.

  • avatar
    volvo

    Crackers asked: “Who is actually going to pay the fine.”

    The purchasers of Daimler products. Who do you think pays business taxes? The costs are just passed through to the consumer.

  • avatar
    durailer

    My guess is that you won’t hear about Lotus paying any of these fines. You can be a small-volume performance-oriented manufacturer and stay on target.

    That said, it seems pointless to fine Ferrari… I wonder what’ll happen after Porsche buys VW?

  • avatar
    L47_V8

    BabyM :
    December 29th, 2007 at 2:02 pm

    Where does this money go?

    Probably a fair part of it went to West Virginia, to build something and name it after Robert C. Byrd.

    As a West Virginian, this made me laugh rather hard. I thought it was mostly an inside joke, but, yes, there are far too many things named after that man.

    I agree that there should be more than simple fines that can be written off as CDB line-items during the fiscal year. If the government wants this to mean something, they have to make it mean something.

    But, then, we are talking about the US government.

  • avatar
    L47_V8

    durailer :
    December 29th, 2007 at 2:47 pm

    My guess is that you won’t hear about Lotus paying any of these fines. You can be a small-volume performance-oriented manufacturer and stay on target.

    That said, it seems pointless to fine Ferrari… I wonder what’ll happen after Porsche buys VW?

    Perhaps they will (eventually, maybe, theoretically) use Tesla production to offset their low average mpg numbers? And let’s not forget that they’ve got deep (Malaysian) pockets backing them in the form of Proton.

  • avatar
    L47_V8

    crackers :
    December 29th, 2007 at 10:24 am

    Who is actually going to pay the fine, Daimler, Chrysler or some combination? I’m sure Chrysler doesn’t need this right now.

    My guess is it’s dependent on how many models each nameplate has that affect the CAFE numbers, and that the responsibility will be distributed accordingly. Chrysler is extremely SUV-heavy, and even their small cars don’t get stellar numbers (recently rented a 3.5L Chrysler Sebring that averaged 22.8 over 400 miles, with around 90% of the miles being highway cruise-control miles), but there’s something to be said for 6.3L supercharged AMG engines and 3.5L V6s that get 19 mpg combined in the C-Class.

  • avatar

    Not only do the consumers pay the trickle down of the fine, but they pay a gas guzzler tax on cars that exceed a certain consumption. It’s lovely to be taxed on something twice, isn’t it? Well, make that 3 times (sales tax) & in some states 4 (registration based on vehicle value).

  • avatar
    50merc

    “Who actually will pay the fine?” The answer is: it depends.

    Economists have given considerable thought to this question. If the market won’t allow price increases, then consumers won’t be paying the tax. Labor might bear some of the burden through shrinkage of current compensation/benefits or smaller pay raises in the future. But if neither consumers or labor take the hit, then shareholders bear the tax. I’d suppose the impact of more taxes on the Detroit 2.8 will be shared by labor and capital, though in some unknown ratio. Chrysler is in no position to raise prices.

    In the long run, of course, the effects of additional taxation ripple all through the economy: less investment, fewer jobs, less consumer spending, etc. But that’s another complicated topic. And as Keynes observed, in the long run we are all dead.

  • avatar
    Qwerty

    These fines don’t seem too high–at least for Ferrari. They sell somewhere between 3K and 4K vehicles in the U.S., so we are looking at a whopping $200 – $300 per car. That’s chump change.

    What is the per vehicle fine for the other companies?

  • avatar
    borderinsane

    In CY 2006 combined Daimler+Chrysler sold about 4 million vehicles. Lets see, USD30 million fine divided by 4 million vehicles is about… USD7.50 per vehicle. That’s basically a cupholder in terms of cost.

    I’m not an environmentalist nor a fan of taxation; but I really think that a gas guzzler tax based on estimated fuel consumed by the vehicle levied on a car owner at registration (for every year the car is registered) (and instead of at the gas pump where it is subsumed to a higher gas price) would change consumer habits — something like USD2.00 a gallon.

    So, a 2007 Mercedes-Benz S600 gets about 13 MPG (per fueleconomy.gov). If the driver put 25,000 miles on the car in the year, the vehicle would have consumed about 1,900 gallons in fuel for the year. For July 2007, the API calculated the US national average per-gallon fuel tax at USD0.47/gal. For 1,900 gallons of fuel that represents ~USD900 in taxes paid.

    USD900 in fuel taxes kinda puts that USD7.50 NHTSA fee in perspective, eh?

    But, lets say that when the S600 owner went to re-register the car he was required to pay an additional USD3,800 in fees based on his estimated 1,900 gallons of fuel consumption. Now, a whopping USD3,800 at registration would change car buying and driving habits and pretty damn quick.

  • avatar
    jthorner

    The answer to the who pays the fine question is simple in this case because it is right on the window sticker For example, the BMW 760I $125,075 sticker includes a line item for $1700 gas guzzler tax.

    If you want to look up any particular vehicle just use the carsdirect.com site to price out the car you are curious about. Any gas guzzler tax will show up as a line item in the options area with it already checked off.

  • avatar

    Now we know why AMG (muscle) cars are so frickin’ expensive.

  • avatar
    ihatetrees

    Do any domestic makes’ models that get horrible mileage take the BMW route and just put it on the damn sticker?
    I know the Corvette manual has that annoying thingy (easily defeated) that controls what gear you use. Why not just slap the tax on the sticker like the Germans? Or does GM have other vehicle/enviro offsets like Cobalts/Malaysian tree farms?

  • avatar
    jthorner

    I don’t believe any US based mfg. has ever had to pay a CAFE fine. My understanding is that the fine kicks in based on fleet averages, not individual models. One of the advantages Hummer has in being part of GM is that I believe they also have been able to avoid the fines in recent times.

    I’m not sure how BMW, Mercedes and others allocate the fines amongst their various models.

    An older list of fines collected through 2004 is here:

    http://www.nhtsa.gov/cars/rules/CAFE/FINES-COLLECTED-SUMMARY.html

    Interestingly enough, Jaguar and Volvo are both on that list pre-Ford purchase, but not after. GM and Ford never show up on it.

  • avatar

    jthorner:
    I am pretty sure the gas guzzler tax is separate from the fines.

    borderinsane:
    Interesting idea, but I don’t see states going through the extra paper work to do that at registration time. If you want a punitive fuel tax, put it on the fuel.

    What if someone owns a trailer queen Ferrari, that they just take to track events. For the 500 miles they put on it, they would be getting way less than what the sticker says for mpg. On the other end, you punish people that actually maintain their cars and drive sensibly to consume less gas, the same as those that carry around 500# of crap in the back seat and have all their tires under inflated by 10 PSI.

  • avatar
    borderinsane

    maxhedrm:

    The Province of Ontario already collects odometer readings when registering a vehicle or renewing license plates; so the renewal/registration software can do the calculation easily.

    Regarding putting the tax at the pump: Some studies suggest that fuel taxes move the cost of the tax to oil producers instead of consumers. A fee on fuel consumption levied on the drivers (vehicle consumers) will more likely be felt on vehicle producers than fuel suppliers.

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