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The Corner

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Auto Industry’s Judgment Day?



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March 30th turned to be quite a day for our domestic auto industry. Amidst the hullabaloo over Obama’s decision to fire former General Motors CEO Richard Wagoner, few noticed the U.S. Department of Transportation’s release of a new 262-page regulation requiring automakers to meet yet another costly round of fuel-economy standards for cars and light trucks. (See Department of Transportation press release here.)

 

According to a DOT press release:

U.S. Secretary of Transportation Ray LaHood announced today that the Department of Transportation has posted the new fuel economy standards for cars and light trucks for the 2011 model year…

On January 26, 2009, President Barack Obama directed the Department of Transportation to review relevant legal, technological, and scientific considerations associated with establishing more stringent fuel economy standards, and to finalize the 2011 model year standard by the end of March.

The new standards will raise the industry-wide combined average to 27.3 miles per gallon (a 2.0 mpg increase over the 2010 model year average), as estimated by the National Highway Traffic Safety Administration (NHTSA). It will save about 887 million gallons of fuel and reduce carbon dioxide emissions by 8.3 million metric tons.

The new standard comes to us thanks to a 2007 energy law that mandates an overall 35 mile-per-gallon standard by 2020.

 

The Detroit News reported that the new standard will saddle Detroit’s reeling auto industry (and their dwindling number of consumers) with considerable new costs, costs that consumers may not recoup for almost eight years:

Stricter fuel economy standards….for the 2011 model year will cost struggling auto companies nearly $1.5 billion and boost the cost of passenger vehicles an average of $64 for cars and $126 for light trucks.

The National Highway Traffic Safety Administration said the additional vehicle cost will be recouped by buyers of pickups, SUVs and minivans, through fuel savings, in an average of 7.7 years. Passenger car buyers will recover that cost in an average of 4.4 years.

So, even as one federal agency unloads tens of billions of our hard-earned dollars on the seemingly fruitless rescue of the auto industry, another happy group of bureaucrats works day and night to add a quick $1.5 billion to its burden. Is this the clinical definition of insanity or what?

 

Oh, and the DOT press release also notes that its regulatory worker-bees are still at it:

Secretary LaHood also noted today that work on the multi-year fuel economy plan for model years after 2011 is already well underway.



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