How do you celebrate Detroit’s automotive recovery? By strangling it with new mpg regulations that will price new cars out of reach of many customers.
“We call it ‘The Cuban Syndrome,’” says Center for Automotive Research (CAR) economist Sean McAlinden this morning at CAR’s annual conference in Traverse City, Michigan. “When you have extremists involved, they set goals that are out there too far and older cars begin to appear in greater numbers” as customers are priced out of the market.
“Our studies say (the regulation) will cost at best $6,000 per vehicle,” he says, far outstripping any gas savings from exotic new hybrid technologies required to meet Obama’s utopian 54.5 mpg goal. One of the industry’s leading economists, McAlinden dismissed low-ball government estimates that the regs would cost “only” $2,000 per vehicle.
“Fifty-five miles-to-the-gallon doesn’t pay. So people will stop buying. We have a sophisticated after-market,” he concluded.
McAlinden’s sobering words threw a wet blanket on last week’s forced-sunshine photo-op in Washington where Big Three CEOs stood with the president as he announced his latest edict. Washington-dependent GM and Chrysler had no choice to but to smile through clenched teeth.
“Detroit is still owned by the government,” responded McAlinden when pressed by WJR radio host Frank Beckmann as to why the automakers would agree to such a display of political theater. “The new 54.5 mpg mandate sets an impossible goal by 2025.”
The conference coincided with the good news that the Detroit Two continue to rebound from bankruptcy. But as the CAR economist’s comments make clear, automakers are wary of new Obamaregs that are also dimming the future of the energy and health sectors.