Anwyl: CAFE Proposals "Ignore Consumers" Who Are "Not On Board"

Edward Niedermeyer
by Edward Niedermeyer

The Congressional Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending held hearings this week on proposed CAFE standards, as part of Chairman Darryl Issa’s investigation of the regulations. The first panel’s testimony can be seen in its entirety in the video above (all prepared testimony can be found in PDF format here), and it’s worth watching. Though the predictable D.C. partisanship certainly shows up, Anwyl’s testimony was the highlight the hearing, being a tough but fair analysis of the standards. Hit the jump for a brief roundup.

The panel in question had two clearly partisan witnesses: Marlo Lewis of the Competitive Enterprise Institute, and Roland Hwang of the Natural Resources Defense Council. But the contributions of both Edmunds CEO Jeremy Anwyl and Ohio-based independent trucker Scott Grenerth were authentic and revealing, despite being very different in content. While Grenerth provided a ground-level perspective on practical issues with new truck emissions regulation (which is not really our department here at TTAC), Anwyl provided the most germane testimony for students of the passenger car industry: a critique of the lack of consumer input in new standards.

His argument is not complicated, and his submitted testimony (along with graphs and commentary) can be found here. In his own words,

I have three points to make this morning.

The first is that — up until now — consumers have been either ignored or misrepresented.

The second is that consumers matter.

The third is that consumers are definitely not on board.

In support of his first point, Anwyl cites the EPA’s own presentations which list environmental groups, auto firms, technology suppliers, labor unions, governmental agencies and EV charging firms as “stakeholders,” without ever referring to consumers. He goes on to argue that

I know there have been polls showing consumers “want” higher mileage standards. These polls are worse than meaningless; they are grossly misleading. Instead of polls, we should first and foremost be guided by what consumers are actually doing; by actual purchases.

And, argues Anwyl, consumers are not buying cars for fuel efficiency. Using market data and its proprietary market simulator (which looks to be fairly strong considering Edmunds’ strong record in our new Grade The Analysts feature), Anwyl shows that even among subcompact purchases, fuel economy maxes out as a 15% vehicle attribute weighting. In every segment, fuel economy is a less-important attribute than “brand.” Moreover, Anwyl points out that consumers expect a 12-month return on investment in fuel-saving options like hybrid drivetrains, when in fact they tend to run much longer than that (6-9 years for Camry, for example).

Anwyl sums up

I do have some good news: looking back, the auto industry seems to have delivered the impossible. They have added features, increased safety, elevated performance—and delivered increased fuel economy. Much of this during a period when CAFE standards were stable. I credit mostly the advance of technology and expect this progress to continue. But if mandates trigger an escalation of prices, a reduction in consumer utility or the adoption of technologies before they have been proven, consumers will react. We saw this play out before in the late Seventies and early Eighties when the domestic auto industry, torn between mandates for greater fuel efficiency and consumer demand for larger vehicles, introduced a generation of truly awful vehicles. The reputational damage from this era lingers today.

Push too far, too fast and we could easily destabilize an industry that is a vital engine of our collective prosperity.

Edward Niedermeyer
Edward Niedermeyer

More by Edward Niedermeyer

Join the conversation
2 of 35 comments
  • Fred schumacher Fred schumacher on Oct 14, 2011

    Consumers should have representation in the decision making process; however, consumers have shown themselves to underestimate long term cost over short term gain. They're not infallible; neither is the market, which makes mistakes all the time and finds itself needing to readjust. It's a feedback loop. The primary role of the CAFE standards is to put everyone on a level playing field, or American manufacturers will once again find themselves unprepared, as they were in the 1970s, when fuel cost and availability suddenly change. Mining is a one-time harvest. The world is littered with abandoned mining towns. Fossil fuels are limited in availability. They are finite. It's better to prepare ahead, than to ignore reality, continuing to behave in customary ways. Without CAFE, manufacturers are at greater risk of misreading the market and jumping in too soon or too late, too little or too much, and being temporarily trounced by their competitors for their mistake, in the short run while being right in the long run. Manufacturers now seem to understand this dynamic. I hear very little complaints coming from them. I think they now realize that CAFE is acting like an insurance policy to protect them from themselves.

  • Mullholland Mullholland on Oct 14, 2011

    Ease of parking? There are 12 attributes in the survey that Anwyl presented, nowhere do I see, "ease of parking". I'm more likely to believe in the relevance of his data than your personal observations.

  • ToolGuy Tungsten trim? I am holding out for the Depleted Uranium trim.
  • Proud2BUnion Mr. Allen Wrench needs tungsten to live!
  • Lorenzo All the efforts made over decades to reduce/eliminate NVH in ICE cars, and now they're putting noise and vibration into electric cars. It reminds me of efforts to make veggie burgers taste like meat. Vegetarians don't want the taste of meat, and meat eaters will want meat, not veggie burgers.
  • Jalop1991 A true golf cart.Sure, it's a penalty box inside. But you're not in it for more than a few minutes at a time during commutes and in between charging stops.Ergo, it's the cart.
  • Zipper69 I'm sure it will sell just fine at all trim levels.I'd only note that IMHO the dashboard is a bit of a busy mess.